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WAR DEPARTMENT: : • OFFICE GF SECRETARY 



SPECIAL REPORT OF 



WM. H. T AFT 

Secretary of War 



TO THE PRESIDENT 



ON THE PHILIPPINES 




III; 



WASHINGTON 
GOVERNMENT PRINTING OFFICE 

1908 



WAR DEPARTMENT : : : OFFICE OF SECRETARY 



SPECIAL REPORT OF 






WM. H. TAFT 

Secretary of War 
TO THE PRESIDENT 

ON THE PHILIPPINES 




WASHINGTON 

GOVERNMENT PRINTING OFFICE 

1908 






D. of D, 



COJ^TE^TS. 



Page. 

Letter of transmittal 5 

Condition as to law and order — Their restoration and permanent maintenance. 9 

Work of the United States Army 13 

.^—Promise of extension of self-government 14 

Organization of the Federal party 15 

Central government 15 

Effect on permanent order of municipal and provincial governments and 

national assembly 16 

Establishment of courts 17 

Philippine constabulary 19 

Friars' lands 20 

Present condition 23 

Political capacity and intellectual development of the Filipinos under Spain 
and the steps taken by the Philippine government for their general and 

political education 23 

Education in schools 27 

Filipino cadets at West Point 31 

Practical political education 31 

Municipalities and provinces 31 

Civil service 39 

Civil rights 40 

National assembly 42 

Sanitation 49 

Benguet — A health resort 56 

Comparative mortality from January 1, 1901, to September 30, 1907 57 

Mortality compared with same period of previous years -. . 58 

Material progress and business conditions 58 

Value of Philippine exports, 1903-1907, of American occupation 59 

Value of Philippine exports in Spanish times, calendar years 1885-1894.. 60 

Sugar and tobacco — Reduction of tariff 60 

Fodder 62 

New plants 62 

Financial condition of the government 62 

Friars' lands 64 

Final settlement in respect to charitable trusts and Spanish-Filipino Bank 

with Roman Catholic Church 65 

Roads 65 

Railroads in the Philippines 66 

General business conditions 67 

Business future of Philippines 67 

Gold-standard currency 68 

Need of capital — Agricultural bank 68 

Postal savings bank v 69 

3 



4 CONTENTS. 

Material progress and business conditions — Continued. Page. 

Post-office and telegraphs 70 

Mines and mining 71 

United States coastwise trading laws 71 

City of Manila 72 

.- Political future of the islands 73 

Cost of the present government of the islands 77 

Recommendations 79 

Appendix A. 

Negotiations for the settlement of title to certain lands in the Philippine 
Islands claimed by the Philippine government and by the Roman Catholic 

Church, and in the matter of the charter of the Spanish-Filipino Bank 81 

Letter of Secretary of War to President 83 

Tentative agreement between Secretary of War and Archbishop Harty. . . 90 

Archbishop Harty 's petition to the President 95 

Proposals made by Archbishop Harty to the Secretary of War 103 

Decision of the Philippine Commission in the San Jose College case 105 

Opinion of attorney-general of the Philippine Islands as to the Hospico 

de San Jose 126 

Opinion of the attorney-general of the Philippine Islands as to the Hospi- 
tal of San Juan de Dios 129 

Opinion of the solicitor-general of the Philippine Islands as to the Hospi- 
tal of San Juan de Dios 140 

Old statutes of the Banco Espanol-Filipino 145 

New statutes of the Banco Espanol-Filipino 159 



To the Senate and House of Representatives : 

I transmit herewith the report of Secretary Taft upon his recent 
trip to the Philippines. I heartily concur in the recommendations he 
makes, and I call especial attention to the admirable work of Gover- 
nor Smith and his associates. It is a subject for just national gratifi- 
cation that such a report as this can be made. No great civilized 
power has ever managed with such wisdom and disinterestedness the 
affairs of a people committed by the accident of war to its hands. If 
we had followed the advice of the misguided persons who wished us 
to turn the islands loose and let them suffer whatever fate might be- 
fall them, they would have already passed through a period of com- 
plete and bloody chaos, and would now undoubtedly be the possession 
of some other power which there is every reason to believe would not 
have done as we have done; that is, would not have striven to teach 
them how to govern themselves or to have developed them, as we have 
developed them, primarily in their own interests. Save only our atti- 
tude toward Cuba, I question whether there is a brighter page in the 
annals of international dealing between the strong and the weak than 
the page which tells of our doings in the Philippines. I call especial 
attention to the admirably clear showing made by Secretary Taft 
of the fact that it would have been equally ruinous if we had yielded 
to the desires of those who wished us to go faster in the direction of 
giving the Filipinos self-government, and if we had followed the 
policy advocated by others, who desired us simply to rule the islands 
without any thought at all of fitting them for self-government. The 
islanders have made real advances in a hopeful direction, and they 
have opened well with the new Philippine Assembly ; they have yet a 
long way to travel before they will be fit for complete self-govern- 
ment, and for deciding, as it will then be their duty to do, whether 
this self-government shall be accompanied by complete independence. 
It will probably be a generation, it may even be longer, before this 
point is reached; but it is most gratifying that such substantial prog- 
ress toward this as a goal has already been accomplished. We desire 
that it be reached at as early a date as possible for the sake of the 
Filipinos and for our own sake. But improperly to endeavor to hurry 
the time will probably mean that the goal will not be attained at all. 

Theodore Roosevelt. 
The White House, 
January £7, 1908. 

(5) 
22380—08 2 



SPECIAL REPORT OF THE SECRETARY OF WAR. 



War Department, 

Washington, D. C.,- January 23, 1908. 
Mr. President: 

By your direction I have just visited the Philippine Islands. I 
sailed from Seattle September 13, last; reached Manila October 15; 
remained an the Islands until November 9, when I returned to the 
United States via Trans-Siberian Eailway, reaching New York De- 
cember 20. The occasion for my visit was the opening of the Philip- 
pine Assembly. The members of the Assembly were elected in July 
last, in accordance with the organic act of Congress, by the eligible 
voters of the Christian provinces of the Islands, divided into 80 dis- 
tricts. The Assembly becomes a branch of the legislature of the 
Islands coordinate with the Philippine Commission. This makes a 
decided change in the amount of real power which the Philippine 
electorate is to exercise in the control of the Islands. If justified by 
substantial improvement in the political conditions in the Islands, it 
is a monument of progress. 

It is more than nine years since the battle of Manila Bay and the 
subsequent surrender of Manila by the Spaniards to the American 
forces. It is more than eight years since the exchange of -ratifica- 
tions of the treaty of Paris, by which the Philippine Islands passed 
under the sovereignty and became the property of the United States. 
It is more than seven years since President McKinley, by written 
instructions to Mr. Root, Secretary of War, committed the govern- 
ment of the Philippine Islands to the central control of the Philip- 
pine Commission, subject to the supervision of the Secretary of War. 
It is more than six years since the complete installation of a quasi 
civil government in the Islands, with a civil governor as executive 
and the Commission as a legislature, all by authority of the Presi- 
dent as Commander in Chief of the Army and Navy. It is more 
than five years since the steps taken by President McKinley and 
yourself in establishing and maintaining a quasi civil government 
in the Islands were completely ratified and confirmed by the Con- 
gress in an organic act which, in effect, continued the existing govern- 
ment, but gave it needed powers as a really civil government that 
the President under constitutional limitations was unable to confer. 
The installation of the Assembly seems to be, therefore, an appro- 
priate time for a precise statement of the national policy toward the 
people of the Philippines adopted by Mr. McKinley, continued by 
you, and confirmed by Congress, for an historical summary of the 
conditions political, social, and material, existing in the Islands when 
the United States became responsible for their government, and for a 

(6) 



review of the results of governmental measures taken to improve the 
conditions of law and order, the political and intellectual capacity of 
the people, and their sanitary and material welfare. 

The policy of the United States toward the Philippines is, of course, 
ultimately for Congress to determine, and it is difficult to see how one 
Congress could bind another Congress, should the second conclude to 
change the policy declared by the first. But we may properly assume 
that after one Congress has announced a policy upon the faith oi 
which a whole people has for some years acted and counted, good con- 
science would restrain subsequent Congresses from lightly changing 
it. For four years Congress in silence permitted Mr. McKinley and 
yourself, as Commanders in Chief of the Army, to adopt and carry 
out a policy in the Philippines, and then expressly ratified everything 
which you had done, and confirmed and made part of the statute cer- 
tain instructions which Mr. McKinley issued for the guidance of the 
Philippine Commission in making civil government in the Islands. 
Not only this, but Congress closely followed, in the so-called organic 
act, your recommendations as to provisions for a future change in the 
Philippine government. The national policy may, therefore, be found 
in the course pursued and declarations made by the Chief Executives 
in Congressional messages and other state papers which have met the 
approval of Congress. 

Shortly stated, the national policy is to govern the Philippine 
Islands for the benefit and welfare and uplifting of the people of the 
Islands and gradually to extend to them, as they shall show them- 
selves fit to exercise it, a greater and greater measure of popular self- 
government. One of the corollaries to this proposition is that the 
United States in its government of the Islands will use every effort 
to increase the capacity of the Filipinos to exercise political power, 
both by general education of the densely ignorant masses and by 
actual practice, in partial self-government, of those whose political 
capacity is such that practice can benefit it without too great injury 
to the efficiency of government. What should be emphasized in the 
statement of our national policy is that we wish to prepare the 
Filipinos for popular self-government. This is plain from Mr. Mc- 
Kinley's letter of instructions and all of his utterances. It was not 
at all within his purpose or that of the Congress which made his letter 
part of the law of the land that we were merely to await the organiza- 
tion of a Philippine oligarchy or aristocracy competent to administer 
government and then turn the Islands over to it. On the contrary, 
it is plain, from all of Mr. McKinley's utterances and your own, in 
interpretation of our national purpose, that we are the trustees and 
guardians of the whole Filipino people, and peculiarly of the ignorant 
masses, and that our trust is not discharged until those masses are 
given education sufficient to know their civil rights and maintain 



8 

them against a more powerful class and safely to exercise the politi- 
cal franchise. This is important, in view of the claim, to which I 
shall hereafter refer, made by certain Filipino advocates of imme- 
diate independence under the auspices of the Boston anti-imperialists, 
that a satisfactory independent Philippine government could be es- 
tablished under a governing class of 10 per cent and a serving and 
obedient class of 90 per cent. 

Another logical deduction from the main proposition is that when 
the Filipino people as a whole, show themselves reasonably fit to 
conduct a popular self-government, maintaining law and order and 
offering equal protection of the laws and civil rights to rich and 
poor, and desire complete independence of the United States, they 
shall be given it. The standard set, of course, is not that of perfec- 
tion or such a governmental capacity as that of an Anglo-Saxon peo- 
ple, but it certainly ought to be one of such popular political capacity 
that complete independence in its exercise will result in progress rather 
than retrogression to chaos or tyranny. It should be noted, too, that 
the tribunal to decide whether the proper political capacity exists to 
justify independence is Congress and not the Philippine electorate. 
Aspiration for independence may well be one of the elements in 
the make-up of a people to show their capacity for it, but there are 
other qualifications quite as indispensable. The judgment of a people 
as to their own political capacity is not an unerring guide. 

The national Philippine policy contemplates a gradual extension 
of popular control, i. e., by steps. This was the plan indicated in Mr. 
McKinley's instructions. This was the method indicated in your 
recommendation that a popular assembly be made part of the legis- 
lature. This was evidently the view of Congress in adopting your 
recommendation, for the title of the act is " For the temporary gov- 
ernment of the Philippine Islands " and is significant of a purpose or 
policy that the government then being established was not in perma- 
nent form, but that changes in it from time to time would be 
necessary. 

In the historical summary of conditions in the Islands when the 
United States assumed responsibility for their government and the 
review of measures adopted by the present Philippine government 
to improve conditions and the results, it will be convenient to con- 
sider the whole subject under the following heads: 

1. The conditions as to law and order. The way in which they 
have been restored and are now permanently maintained. 

2. The political capacity and intellectual development of the 
Filipinos under Spain and the steps taken by the Philippine govern- 
ment for their general and political education. 

3. Conditions of health under Spain. The sanitary measures under 
(he Philippine government. 



4. The material and business conditions. Progress made under 
present government. 

5. The future of the Philippines. 

6. The cost of the Philippine government to the United States. 

THE CONDITIONS AS TO LAW AND ORDER— THEIR RESTORATION 
AND PERMANENT MAINTENANCE. 

In 1896 occurred the first real insurrection against the Government 
of Spain in the Philippine Islands. The idea of a more liberal gov- 
ernment than that which Spain gave the Islands had taken root in 
1871 with the opening of the Suez Canal, the flocking of Spaniards 
to Manila, and the spread of republican doctrines that had had a short 
triumph in the mother country about that time. In the measures of 
repression which were adopted from time to time by Spanish govern- 
ors-general the aid of Spanish parish priests was thought by the peo- 
ple to be actively enlisted in ferreting out those suspected of sedition 
and too liberal political views. The priests were largely from the 
four religious orders — the Dominicans, the Augustinians, the Fran- 
ciscans, and the Eecoletos. There was a considerable body of native 
priests also, but they were of the secular clergy, held the less desirable 
posts, and were hostile to the Spanish friars. Three of the religious 
orders held large bodies of rich agricultural lands situate, much of it, 
in Cavite, Laguna, Manila, Morong, Bataan, and Bulacan, all thickly 
populated provinces close to Manila. Their tenants numbered sixty 
or seventy thousand persons. The insurrection of 1896 was not only 
against the Spanish Government to secure a more liberal regime, but 
it was also for the elimination of the friars as a controlling political 
element in the community. . It was largely confined to Cavite, La- 
guna, Manila, and Bulacan, where lay the large friars' estates. It had 
an agrarian aspect. There was much fighting, and the losses on both 
sides were very heavy, especially in the province of Cavite. Ulti- 
mately the drastic measures of the Spaniards drove Aguinaldo and 
the forces which he led out of Cavite into Bulacan and led to what 
was known as the treaty of Biac-na-Bato. This was an arrangement 
by which many of the insurrecto chiefs, including Aguinaldo, agreed, 
in consideration of the payment of a large sum of money, to end the 
insurrection and withdraw from the Islands. The money was to be 
paid in three installments. The first payment was made, and many of 
the chiefs, including Aguinaldo, withdrew from the Islands and went 
to Hongkong. There was much dispute as to what the agreement was, 
and it was strenuously insisted by each side that the other failed to 
comply with its stipulations. It is not material now to consider this 
mooted question. Suffice it to say that in 1898, when Admiral Dewey 
attacked the Spanish fleet in Manila Bay, the embers of dissatisfac- 
tion on the part of the former Filipino insurgents with the Spanish 



10 

Government were still aglow, and it was not difficult for Aguinaldo 
to raise a force of insurrectos to aid the Americans in surrounding 
Manila and in driving Spain from the Islands. 

Between 1896 and 1898 the conditions which had been brought on 
by the first insurrection continued, and trade was much interrupted, 
agriculture did not flourish, and conditions as to the maintenance of 
order were by no means favorable. As an index to this, it may be 
said that the managers of the friars' estates collected no rents from 
the tenants after 1896. The battle of Manila Bay and the defeat of 
the Spanish fleet destroyed the prestige of Spain throughout the 
Islands and created insurrection in nearly every province. The re- 
fusal of General Merritt to permit Aguinaldo's troops to enter 
Manila created a resentment on the part of the Filipino soldiers, 
and the relations between the Americans and the Filipinos soon be- 
came strained. The situation was not relieved at all by the signing of 
the treaty at Paris, transferring the sovereignty of the islands to the 
Americans. Meantime, as the Americans were confined to the occu- 
pation of Manila, Aguinaldo and his military assistants attempted the 
organization of a government throughout the islands. A so-called 
constitutional convention was held at Malolos and a constitution was 
adopted. At the same time the Visayan republic was organized, to 
embrace the Visayan Islands, under certain Visayan leaders. It pro- 
fessed allegiance to Aguinaldo's government. Neither Aguinaldo's 
government nor the Visayan government was able to maintain order, 
and the whole country was subject to the looting of predatory bands, 
and chaos reigned. Where the Aguinaldo government had authority, 
it was exercised with military severity and with much local oppres- 
sion and corruption. On the 4th of February, 1899, there was an 
attack by the Filipino forces surrounding Manila upon the American 
troops, which was successfully resisted. Later on, upon the 23d of 
February, there was an outbreak in Manila itself, and an attempt to 
burn the city, which was suppressed by the American troops with a 
heavy hand. 

On the 11th of April the treaty ceding the Philippine Islands to 
the United States was ratified and ratifications exchanged. From 
that time until the spring of 1900 a campaign was carried on by 
the American forces against the regularly organized troops under 
Aguinaldo. Aguinaldo's forces were defeated and scattered, and then 
in 1900 there succeeded a guerrilla warfare in nearly every province 
in the Islands, which was continued with more or less vigor until July, 
1902. The guerrilla warfare was carried on only because of the 
encouragement received by the insurrectos from speeches of the 
so-called " anti-imperialists " and the assurances publicly given by 
political leaders in the United States of immediate severance of the 



11 

relations between the Islands and the United States in case the Ad- 
ministration were defeated in the election. At times the warfare 
would seem to cease and the insurrection seem to be at an end, and then 
it would revive again, apparently with a view to influencing elections 
in America. 

It can readily be inferred from this statement that from the 
breaking out of the insurrection in 1896, with the new insurrection 
in 1898, and the war with the Americans beginning early in 1899 until 
the close of the guerrilla warfare in June, 1902, the conditions of 
the country were not peaceable and agriculture could not flourish. 
Not only did the existence of actual war prevent farming, but the 
spirit of laziness and restlessness brought on by a guerrilla life af- 
fected the willingness of the native to work in the fields. More than 
this, the natural hatred for the Americans which a war vigorously 
conducted by American soldiers was likely to create did not make the 
coming of real peace easy. 

But in addition to these disturbed conditions, due directly to war, 
there are certain features of Philippine civilization always present, 
war or no war, that do not tend to permanent tranquillity and can not 
be ignored. 

In the Erst place the Philippines have been infested with ladrones, 
or robber bands, since their earliest history. The Spanish Govern- 
ment maintained a large force, called " la guardia civil," to suppress 
the evil. In some provinces, blackmail was regularly paid by large 
landowners to insure themselves against the loss incident to attack and 
destruction of their property. In the province of Cavite, for instance, 
ladronism was constant, and it was understood that the managers of 
the friars' estates, which amounted in all in that province to 125,000 
acres, usually paid blackmail to ladrones in the form of money or 
provisions. The province of Cavite was known as " the mother of 
ladrones," and there was certainly a sympathy between the lower 
classes and the ladrones who mulcted the landlords. 

But besides the ladrone habit, which makes for continued disorder, 
there is another quality of the ignorant masses of the Philippine 
people that is a constant danger to tranquillity. More than 80 per 
cent of the Philippine people are illiterate. Their ignorance is dense. 
They speak some 15 or 16 different Malay dialects. Knowledge of 
one dialect does not give an understanding of another. Each dialect 
has a limited vocabulary, which offers no medium of communication 
with modern thought or civilization. Their ignorance makes them 
suspicious of all educated persons but those of their own race who 
know their dialect and are well to do. 

The result is that in rural communities in the Philippines whole 
townships of people are completely subject to the will of any educated, 



12 

active-minded person living in that community, who knows the local 
dialect and is willing or able to arouse either the fears or cupidity of 
his neighbors into the organization of a band either to resist fancied 
dangers or oppression, to satisfy vengeance, or to achieve a living and 
comfort without labor. This is the central and most important fact 
in the make-up of the local Philippine communities. It has led to the 
abuse of caciquism, i. e., local bossism, to which I shall refer in the 
question of the organization of municipalities and provincial govern- 
ments. The history of the insurrection and of the condition of law- 
lessness which succeeded the insurrection is full of instances in which 
simple-minded country folk at the bidding of the local leader, or 
cacique, have committed the most horrible crimes of torture and mur- 
der, and when arrested and charged with it have merely pleaded that 
they were ordered to commit the crime by the great man of the 
community. This irresponsible power possessed by local leaders over 
their ignorant neighbors, in case of an independent Filipino govern- 
ment lacking the moral strength which the United States Government 
derives from its power and resources and its determination to punish 
disturbance and maintain order, would, under present conditions, 
lead, after a short period, to a chaos of ever-recurring revolt and in- 
surrection to satisfy the vengeance of disappointed bosses 'and local 
leaders. 

Whenever Filipino municipal officials come into contact either with 
non-Christian tribes or with inferior peoples of their own race like 
those who live in the mountains of Samar and Leyte, known as 
" pulahanes," they are likety to exercise official authority for their 
own profit and to the detriment of the inferior people. Thus in 
Samar and Leyte the mountain people raise" a good deal of hemp. 
The municipal authorities of the lowlands and the local caciques 
conspire to prevent the disposition of this hemp to anyone but their 
own agents at an unjustly low price, using duress and a show of 
official authority for the purpose. This fraud and mistreatment 
ultimately creates among the mountain peoples a just sense of indig- 
nation. Then it is that some religious fakir invites them to organize 
against their enemies, under the charm of some religious token, and 
some lowland village is sacked and its people are murdered. The 
central and provincial authorities intervene and a war ensues, which 
lays waste much of the interior of the islands, to suppress a disorder 
that had its inception in a just cause of complaint. 

Of course the frequency of such disturbances is reduced as educa- 
tion spreads, as the poor and oppressed begin to understand their 
rights and the lawful method of asserting them, and as the real cause 
of such outbreaks are more clearly understood and suppressed. But 
no account of the difficulty of maintaining peace and order in the 



13 

Philippines would be accurate or just which did not make clear this 
possible recurring cause of trouble and disturbance under present 
conditions, due to the ease with which simple-minded, ignorant people 
of a community can be aroused, by one or more of the better educated 
of their own race viciously inclined, to deeds of murder and cruel 
violence. Such disturbances are generally heralded as the evidence of 
seething sedition and discontent with the American Government, 
whereas they are generally but the effect and symptom of mere local 
abuses entirely Filipino in origin. 

Having thus described the conditions of disorder, actual and poten- 
tial, in the Philippines, due not only to the four or five years of inter- 
mittent and recurring war, the rancor and race hatred it tended to 
create, the unfounded hopes held out by American anti-imperialists, 
and all the other sequelae of war, but also to certain normal features 
and qualities of the present Philippine civilization, I come to review 
the measures taken and policy adopted by the American Government 
to bring the Islands to their present state of complete tranquillity. 

THE WORK OF THE UNITED STATES ARMY. 

The agency of the Army in bringing about order in the Islands 
must never be minimized. The hardships of the campaign which 
it had to carry on were very great. The responsibility which was 
thrown upon captains, lieutenants, and sergeants in command of 
small detachments into which it was necessary to divide the Army 
to meet the exigencies of guerrilla warfare was met with courage and 
intelligence and great fertility of resource under most trying and 
unusual conditions. It is not too much to say that no other army 
of the same size could have accomplished the results which were 
accomplished by the American Army. At times there were some 
members of this Army who were tempted, in the eagerness of pursuit, 
into indefensible and cruel practices for the obtaining of informa- 
tion — practices which had been common among the Spaniards and the 
Filipinos themselves. Revelations of these cruelties led to severe 
indiscriminate criticism and attacks on the Army as a whole which 
were calculated to discourage and dishearten, but in spite of all 
difficulties the work went on. At one time in the campaign against 
guerrilla warfare there were more than 500 different posts and more 
than 65,000 men in arms. Certain it is that order would have never 
been restored without the efficient and courageous service rendered 
by the Army, and in spite of all the stories that were told of the 
cruelties inflicted by the Americans upon Filipinos, only a small part 
of which were true, any candid observer of the conditions at the time 
must admit that the American soldiers as a body exhibited toward 
the Filipinos a self-restraint and a sympathy with the benevolent 



14 

purposes of the administration which the circumstances and the char- 
acter of the Filipino warfare carried on were not calculated to 
invite. 

Not only did the Army do most efficient work in the suppression of 
the insurrection when war was rife, but the presence of 12,000 Ameri- 
can soldiers in the Islands since has been a moral force of great weight 
to secure peaceful conditions. Occasionally they have been called on 
for active work in subduing disorders in particular provinces which 
had gone beyond the control of the local and insular peace officers and 
they have rendered prompt and effective service in such cases. They 
are now being concentrated in larger and larger posts for economical, 
educational, and disciplinary purposes, but their presence anywhere 
in the Islands is beneficial to the cause of order. They are now popu- 
lar with the Filipinos, and we find the same objection to abandonment 
of posts by neighboring Filipino communities that we meet in the 
United States. 

PROMISE OF EXTENSION OF SELF-GOVERNMENT. 

President McKinley announced as his policy that the Philippine 
Islands would be taken over by the American Government to be 
governed for the benefit of the Filipinos, and that as they developed 
fitness for partial self-government it should be gradually extended 
to them. In order to enforce and give evidence of this purpose, he 
appointed a Commission in 1899, known from its chairman, Hon. J. 
G. Schurman, as the " Schurman Commission," to visit the Philippine 
Islands and extend local self-government as rapidly as possible. The 
Commission was able only to investigate conditions and to report that 
in its judgment the Filipinos were not fit for self-government. It was 
able to be present at the organization of municipal government in a 
few towns which had been captured by the Americans, but it prac- 
tically was able to do no constructive work, in view of the conditions 
of war that existed while it was there. It returned to the United 
States and made its report. 

In February of 1900 a new Commission was appointed by Presi- 
dent McKinley, who gave it much more ample powers than its pred- 
ecessor, for the purpose of organizing civil government in the wake 
of war as rapidly as conditions would permit. The powers conferred 
were set forth in a letter of instructions delivered by President 
McKinley to Mr. Root, Secretary of War, for his guidance and that 
of the Commission in respect of the policy to be pursued in the 
Philippines. The Commission arrived in June, 1900. The Com- 
mission was not authorized to assume any authority until the 1st of 
September and spent its time from June until September, 1900, in 
making investigations. It then took over the power and duty of en- 
acting legislation to make a government for that part of the Islands 



15 

in which war had ceased to exist and to make appropriations from 
funds raised by taxation for civil purposes. The preparation and 
enactment of a municipal and a provincial code for the organization 
and maintenance of municipalties and provinces in the Islands occu- 
pied much of the attention of the Commission during the remainder 
of the year 1900. 

For the three or four months prior to the Presidential election in 
November, 1900, it was impossible to proceed with the actual organi- 
zation of civil government. The insurgents were assured that the 
Administration of Mr. McKinley would be defeated and that his de- 
feat would be immediately followed by a separation of the Islands 
from the United States. Everything hung on the election. The re- 
election of Mr. McKinley was a great blow to the insurrectos. 

ORGANIZATION OF THE FEDERAL PARTY. 

It is a mistake to suppose that the war by the Filipinos against the 
Americans had the sympathy of all the Filipinos. On the contrary, 
there were many intelligent and conservative men who favored 
American control and who did not believe in the capacity of their 
people immediately to organize a government which would be stable 
and satisfactory, but in the face of a possible independence of the 
Islands, they were still. Upon Mr. McKinley's second election many 
of these persons reached* the conclusion that it was time for them to 
act. Accordingly, they formed the Federal Party, the chief platform 
of which was peace under American sovereignty and the acceptance 
of the American promises to govern the Islands for the benefit of the 
Filipinos and gradually to extend popular self-government to the 
people. The Federal Party received accessions by thousands in all 
parts of the Islands and in every province, so that the Commission 
was enabled during the year 1901, and under the auspices, and with 
the aid of, the Federal Party, to organize civil government in some 32 
or 33 provinces, or in substantially all of them. The proof of the 
purposes of the American Government, given in the popular features 
of the provincial and municipal codes, which bore out in every re- 
spect the general promises of President McKinley, had much to do 
with the ending of the war. From November 1, 1900, until July 1, 
1901, when military government was declared to be ended and a civil 
governor appointed, the men and guns surrendered exceeded that of 
any similar period in the history of the war. 

THE CENTRAL GOVERNMENT. 

The somewhat anomalous creation of the Philippine Commission, as 
a civil legislature in a purely military government established by the 
President by virtue of his powers as Commander in Chief, presented 



16 

some difficult questions of jurisdiction between the military governor 
and the Commission and led to considerable friction. The Commis- 
sion, however, held the purse strings, and as is usual in such cases 
the control of appropriations ultimately left the powers of the Com- 
mission substantial and undisputed. Another difficulty arose in re- 
spect to jurisdiction of the courts established and appointed by the 
Commissioners to issue -writs of habeas corpus to inquire into the 
legality of the detention of civilians by the general commanding. 
This, too, subsequently was worked out in favor o*f the civil courts. 
The differences between the military and civil authorities did not es- 
cape the attention of the Philippine public, and of course the sym- 
pathy of the Filipinos went with the civil side of the controversy, 
and the appointment of a civil governor July 1, 1901, and the cloth- 
ing him with extensive authority had the popular approval. This 
was increased by the appointment to the Commission of three Fili- 
pino members. They were the most prominent members of the 
Federal Party. The Commission now consisted of the civil governor, 
four other Americans, and three Filipinos. The four American 
members, in addition to their legislative work, were made respec- 
tively the heads of four departments — one of finance and justice, the 
second of the interior, the third of commerce and police, and the 
fourth of public instruction. To these departments were assigned the 
appropriate bureaus by which the business of the central government 
was directly carried on. The presence of the Filipinos in the con- 
trolling body of the government offered an excellent opportunity for 
Filipino influence to affect legislation and brought to the new quasi 
civil government a sympathetic support from the Filipino public 
that included most of those but recently in arms against American 
sovereignty. 

In some provinces civil government proved to have been prema- 
turely established, notably in Batangas, Cavite, Cebu, and Samar, 
and in the fall of 1901 the services of the Army were again required in 
those provinces. But ultimately they became peaceful. The guer- 
rilla forces which continued in arms were finally subjugated or 
brought in through the vigor of the Army and the influence of the 
Federal party, before July 1, 1902, when peace was officially declared 
to exist by your proclamation of amnesty. 

EFFECT ON PERMANENT ORDER OF MUNICIPAL AND PROVINCIAL GOVERN- 
MENTS AND NATIONAL ASSEMBLY. 

Under the head of political education I shall describe the initiation 
and maintenance of municipal and provincial governments in some 
detail, and shall consider them and the assembly as* instruments in 



17 

the political education of the Filipinos and comment on their effi- 
ciency and defects as government agencies. I now wish to refer to 
them as part of the so-called policy of " attraction." The Filipino 
people did not expect the liberal and popular provisions of the munici- 
pal and provincial codes, and their enactment created the revulsion 
of feeling that enabled the Federal party to bring on peace. The 
part the people were given in governing both towns and prov- 
inces stimulated them to efforts in behalf of order that became greatly 
more sympathetic and effective, when, as I hereafter point out, the 
officers of the insular constabulary learned their real function, of as- 
sistance and not independent command. The giving control of the 
provincial board to two elected officials added to their sense of re- 
sponsibility as to order in the province and was convincing of the 
sincerity of American promise to extend popular control by gradual 
steps. 

The provisions of the organic act passed by Congress in July, 1902, 
confirming President McKinley's policy and the promise of an as- 
sembly if good order was maintained, had a great effect to make the 
Filipino people anxious to preserve order, and no act of the American 
Executive was more convincing to the people of the good faith of 
the Administration than your proclamation of the elections at a time 
when an excuse for delay within the law might easily have been found 
in some of the disturbances then existing. The existence and influ- 
ence of the assembly are important continuing factors in the mainte- 
nance of law and order. 

ESTABLISHMENT OF COURTS. 

Even under the purely military administration before the appoint- 
ment of the Commission a military governor had established civil 
courts for the purpose of disposing of civil cases and for such viola- 
tions of law as were not more conveniently disposed of by military 
tribunals. The Commission early passed a law dividing the Islands 
into some 15 districts, establishing a court of first instance in each dis- 
trict, together with a supreme court of seven to consider appeals from 
the courts of first instance. This system was recognized and adopted 
by Congress in the organic act of July 1, 1902. The policy was pur- 
sued of appointing a Filipino, the first lawyer of the Islands, the 
chief justice of the supreme court, together with two Filipino col- 
leagues and four Americans. About the same proportion between 
Americans and Filipinos was observed in the appointment of judges 
of the court of first instance. 

There was great difficulty in finding proper material for the Amer- 
ican judges because there were so few American lawyers in the United 



18 

States who spoke Spanish, and it greatly interfered with the conven- 
ience of hearings if the judge did not know Spanish. However, time 
cured this difficulty, because the American appointees rapidly acquired 
a knowledge of the Spanish language sufficient to take testimony and 
hear arguments without interpreters. The first years of the courts, 
especially in the country, were almost entirely occupied in hearing 
criminal cases. The civil government very soon adopted the position 
that after a state of peace had been declared in 1902, men in arms 
engaged in looting and robbery should be treated not as insurrectos or 
as enemies under the laws of war, but merely as violators of the local 
law. In the early days of the insurrection if a body of insurrectos 
was organized in any province and was captured, their guns were taken 
and after a short imprisonment the men were released. This practice 
had led to a feeling on the part of the ignorant people that they 
might with impunity resort to arms, and if caught thereafter that they 
would be imprisoned for a short time only and then released. The 
imposition of long sentences, fifteen or twenty years, and the confine- 
ment of men in Bilibid prison and the requirement that they should 
work at hard labor was a most effective method of teaching the igno- 
rant and easily led members of a community the difference between 
a political revolution and the crime of robbery and living on one's 
neighbors by force. 

A great number of persons in various provinces were prosecuted 
for bandittiism. A statute was passed to cover these cases providing 
that a man might be convicted of a felony by conclusive proof that he 
was a member of a band organized to commit robberies, even though 
no evidence was adduced to show any particular robbery in which he 
was personally concerned. This has been hailed as a departure from 
the usages of the common law and the spirit of our institutions. It is 
nothing of the kind. It is merely the denunciation of a particular 
kind of conspiracy. It was entirely impracticable to identify the per- 
petrators of particular robberies, but it was entirely practicable to 
prove conclusively the existence of a band to commit the robberies, 
and the membership of the particular defendant in that band, although 
his presence at the commission of an overt act it was often impossible 
to show. There is not the slightest reason in law or morals why a man 
thus proved to be a robber should not be punished and punished just 
as severely as the men who were actually taken in the commission of 
the act. The effect of this law was to bring to justice a great number 
of criminals in various provinces, and its vigorous administration by 
both the Filipino and American judges under active prosecution by Fil- 
ipino prosecutors did much toward the suppression of ladronism. 
The difficulty was that the number of convicted persons became so 
large as to strain the capacity of the jails and penitentiaries in the 
Islands. This congested condition has been met, however, now, first, 



19 

by the establishment of a penal colony in the island of Palawan, and, 
second, by the use of prisoners in several provinces for the construc- 
tion of roads. 

After many of those sentenced for highway robbery had served two 
years the governor-general appointed a commission to go over the 
cases to recommend for pardon those persons who, while guilty of the 
crime charged were not of the criminal class, but had been led into 
it by duress and undue influence of neighboring brigand chiefs and 
caciques. Quite a large number of these persons were paroled and 
sent back to their homes to give them an opportunity to become good 
citizens. The changing condition of the country and the maintenance 
of law and order are evidenced by the fact that the proportion of 
civil cases to criminal cases in the courts of first instance and the 
supreme court is rapidly increasing. It is becoming much easier to 
dispose of the criminal cases, while it is the civil cases that now clog 
the dockets. The standard in the administration of justice in the 
Islands is high. It has been sometimes charged by irresponsible 
persons that some of the judges were subject to executive influence. 
An investigation into the matter discloses not the slightest evidence of 
the existence of any such evil, and the whole charge rests on the easily 
spread rumor of disappointed litigants or political enemies of the gov- 
ernment. On the whole, I am quite sure that throughout the Islands 
the judges of the courts, and especially the members of the supreme 
court, have the entire confidence of the public in the justice and sin- 
cerity of their conclusions. No distinction has been made in the hear- 
ing of causes by a Filipino or American judge, and the system moves 
on quietly and effectively to accomplish the purpose for which it was 
adopted. The influence of the courts in the restoration of order has 
been very important. 

THE PHILIPPINE CONSTABULARY. 

Another step most necessary and useful in the restoration of order 
was the organization of a body of upward of 5,000 men, Filipinos 
officered by Americans, into a constabulary divided into companies 
and organized by Regular Army officers. But little difficulty was 
found in the organization of this body as an efficient fighting and 
scouting force, but it took several years of training, of elimination, 
and of severe discipline before the subordinate officers, those assigned 
to each province, were made to understand the proper policy to 
be pursued by them in respect to the native governors and presi- 
dentes of the municipalities who had been elected by the people under 
the municipal and provincial codes. At first there was constant 
friction and suspicion between them, and this did not aid at all the 
work of suppressing ladrones and other disreputable and vicious ele- 
ments of the community. Year by year, however, improvement has 



20 

been made in this regard, and the lesson has been taught that the 
constabulary are not a military force, but a force of police organized 
by the central government and paid out of its treasury to assist in a 
sympathetic way the native local officers in the work of suppression 
of disorder and lawlessness of their particular localities. When I 
was in the Islands two years ago the native papers were full of con- 
demnation of the constabulary and its severity. During the last two 
years a most remarkable change has taken place in the relations be- 
tween the officers and men of this force and the provincial governors 
and officers of the towns, and now there is nothing more popular in 
the Islands than the constabulary. 

FEIARS' LANDS. 

A most potential source of disorder in the Islands was the owner- 
ship of what were called the " friars' lands " by three of the religious 
orders of the Islands — the Dominicans, the Augustinians, and the 
so-called bare-footed Augustinians, known as " Recoletos." These 
lands amounted in all to 425,000 acres, of which 275,000 were in the 
immediate neighborhood of Manila, 25,000 in Cebu, and 125,000 in the 
remote provinces of Isabela and Mindoro. The tenants on those 
which were close to Manila numbered some sixty or seventy thousand 
persons. The attitude of the people toward the friars' lands was 
shown by the fact that the so-called constitutional convention assem- 
bled by Aguinaldo at Malolos nationalized the friars' lands — that is, 
appropriated them to the so-called " Republic of the Philippines." 
With the restoration of order and the establishment of courts the 
representatives of these religious bodies were entitled to go into court 
•and recover from tenants the rents which had been in arrears since 
1896, and to eject them from the lands which they had occupied un- 
less they admitted title and continued to pay rent. The occupants 
of the friars' lands resolutely refused to do either, and the Philippine 
government was confronted with the immediate prospect of suits to 
evict 60,000 tenants in those provinces prone to disturbances and 
insurrection. 

The situation was further strained by the fact that the church, for 
lack of other competent priests, showed every inclination to send 
back to the parishes from which they had been driven as many 
of the friars who had been parish priests as it could. Every 
parish to which a friar priest returned at once began to seethe with 
popular indignation, and threats of violence were constantly made 
toward him. The only solution possible, consistent with the preser- 
vation of vested property rights on the one hand, and the right 
secured by treaty to the friars of freedom of religion and freedom of 
speech in any part of the islands, was some arrangement by which the 



21 

land could be taken over by the Government and the church induced 
not to send friars as parish priests to those parishes where riot and 
disturbance were likely to follow. A visit to Rome for consultation 
with the head of the Eoman Catholic Church resulted in the Pope's 
sending an apostolic delegate to the Islands with adequate powers 
and in subsequent negotiations which ultimately led to the purchase 
of the lands for seven millions of dollars and induced a practice on 
the part of the hierarchy of the church by which they send no friars 
as parish priests into any parish in which the governor-general makes 
final objection. 

The price paid for the lands was a good round sum. It had to be 
in order to secure them. Congress, convinced of the necessity for 
their acquisition, had provided, in the organic act for the establish- 
ment of a government in the Philippines, either for their purchase 
or in the alternative for their condemnation by the Government and 
their subsequent disposition on long, easy terms to the occupants. 
The representatives of the Dominican order objected to the con- 
demnation of their lands and employed able counsel to test the 
validity of the provision for condemnation for such a purpose. The 
point made was a serious one and increased the importance of secur- 
ing the lands by purchase, if possible. With the government as a 
landlord the tenants manifest no disposition to contest its title, save 
in a few isolated cases. I shall not stop now to discuss the present 
value of the lands or their management. I shall refer to that later. 
It is enough for my present purpose to point out that the acquisition 
of these lands by the government and the adjustment of differences 
as to the use of friars as parish priests have removed a fruitful source 
of disturbance in the provinces of Cavite, Laguna, Manila, Bataan, 
Morong, and Cebu. 

By another compromise, to which I shall refer in detail later, a con- 
troversy between the government and the Roman Catholic Church 
as to charitable and educational trusts and in respect to the Spanish- 
Filipino Bank has been settled. At one time this controversy prom- 
ised to contribute to the disorder of the Islands. 

There are no other questions between the government and the 
Roman Catholic Church, unless it can be said that questions of pos- 
session and title to cKurch property arising from the Aglipayan 
schism can be said to involve them. 

Immediately after our negotiations with Leo XIII at Rome were 
found not to include an absolute agreement to withdraw the friars 
from the Islands, Aglipay, a former Catholic priest under excom- 
munication, organized a schism from the Roman church. He called 
his church the Independent Filipino Catholic Church. At first the 
schism spread far and wide through the Islands, and as the number 
of priests of the Roman Catholic Church by reason of the expulsion 
22380—08 3 



22 

of the friars had been reduced so that many churches lay open and 
idle, the priests of the Aglipayan schism, with the acquiescence of 
the townspeople in the various villages where the Aglipayans were in 
the majority, assumed possession of land and church buildings which 
had been occupied in Spanish days by the Roman Catholic Church. 
Possession was taken under a claim that the churches belonged to 
the people of the municipality and that they were able to dispose of 
the use of the churches to such religious purposes as they -saw fit. 
This course of procedure led to innumerable controversies and to fre- 
quent breaches of the peace and to a bitterness of feeling that did not 
make either for the tranquillity of the Islands or their prosperity. 

The Executive consistently and properly declined to decide the 
question of title or the right to possession which arose in each case 
after peaceable possession had been taken. This was regarded as 
unreasonable by the authorities of the Roman Catholic Church, but 
was the only possible course which the civil executive could take with- 
out arrogating to itself judicial powers. Instead of attempting to 
decide these questions the Commission passed a law providing for 
their early settlement by suits brought originally in the supreme 
court. One set of these cases has been decided in favor of the Roman 
Catholic Church and others are now nearly ready for decision, so that 
we may reasonably expect that within six months the whole matter 
may be disposed of, and when this is done the religious obstacles that 
seemed so formidable when the Philippine government was assumed 
by the United States will have been disposed of permanently and that 
fruitful source of disturbance and riot and discontent will have 
ceased. 

I have given in detail the steps taken to restore and maintain order 
in the Islands. I have mentioned the vigorous campaign of the Army 
and the moral restraint of its presence in the Islands, the promises 
of President McKinley as to gradual extension of self-government, 
the organization of the Federal party, the institution of municipal 
and provincial governments on a popular plan, the confirmation of 
President McKinley's policy by the act of Congress establishing a 
Philippine government, assuring a national assembly, and your fulfill- 
ment of the assurance, the establishment of courts with partly Ameri- 
can and partly Filipino judges, the punishment of predatory bands 
as civil felons, the establishment and growth of the insular con- 
stabulary as a sympathetic aid to Filipino municipal and provincial 
officials in suppressing lawlessness, and, finally, the removal by satis- 
factory compromises of the irritating church questions which had 
much to do with causing the original insurrection and. if unsettled, 
were pregnant with disorder. 



23 

PRESENT CONDITION. 

Peace prevails throughout the Islands to-day in a greater degree 
than ever in the history of the Islands, either under Spanish or 
American rule, and agriculture is nowhere now impeded by the fear 
on the part of the farmer of the incursion of predatory bands. 
Under the policy already stated, inaugurated by the instructions of 
President McKinley to Secretary Root, in reference to the establish- 
ment of a temporary government in the Philippines, a community 
consisting of 7,000,000 people, inhabiting 300 different islands, 
many of whom were in open rebellion against the Government 
of the United States for four years, with all the disturbances follow- 
ing from robber and predatory bands which broke out from time^to 
time, due to local causes, has been brought to a state of profound 
peace and tranquillity in which the people as a whole are loyally 
supporting the government in the maintenance of order. This is the 
first and possibly the most important accomplishment of the United 
States in the Philippines. 

THE POLITICAL CAPACITY AND INTELLECTUAL DEVELOPMENT 
OF THE FILIPINOS UNDER SPAIN AND THE STEPS TAKEN BY 
THE PHILIPPINE GOVERNMENT FOE, THEIR GENERAL AND 
POLITICAL EDUCATION. 

Very little practical political education was given by the Spaniards 
to the Filipinos. Substantially all the important executive offices 
in the Islands were assigned to Spaniards, and the whole government 
was bureaucratic. The provincial and municipal authorities were 
appointed and popular elections were unknown. The administration 
of the municipalities was largely under the supervision and direction 
of the Spanish priest of the parish. No responsibility for govern- 
ment, however local or unimportant, was thrust upon Filipinos in 
such a way as to give them political experience, nor were the examples 
of fidelity to public interest sufficiently numerous in the officeholders 
to create a proper standard of public duty. The greatest difficulty 
that we have had to contend with in vesting Filipinos with official 
power in municipalities is to instill. in them the idea that an office is 
not solely for private emolument. 

There was an educated class among the Filipinos under the Spanish 
regime. The University of St. Thomas, founded by the Dominican 
Order early in the seventeenth century, has furnished an academic 
education to many graduates. The same order, as well as the Jesuits 
and the Augustinians, maintained secondary and primary schools for 
the well-to-do. Quite a number of Filipinos were educated in Spain 
or France. As compared with the youth and young men of school 



24 

and college age in the Islands, the number, however, was very small. 
These men were educated either as lawyers, physicians, pharmacists, 
or priests. In politics their knowledge was wholly theoretical. They 
imbibed liberal ideas from the spread of republican doctrines in 
Spain, and the repressive policy of the Spanish Government, of 
course, operated only to encourage them. They were patriotic, and 
soon conceived of the Philippines as a nation. Rizal, a leader of 
Philippine thought, a poet, and a political writer, did not favor 
independence, for he believed his people not yet fitted, but he sought 
reform in the Spanish government of the Philippines and some popu- 
lar voice in it. 

As the protest against Spanish domination grew, the aspiration 
for complete independence took possession of many, and in the in- 
surrections which followed there were many patriots moved by as 
high ideals as those which have led to revolutions in any country. 
Their conceptions of liberty, of independence, of government were 
wholly ideal, however. When in the course of events they came to 
actual government they were unable to realize their conceptions, 
and only a one-man power or an oligarchy with class privilege, and 
no real civil rights for the so-called serving or obedient class, fol- 
lowed. They needed as much education in practical civil liberty as 
their more ignorant fellow-countrymen in reading, writing, and arith- 
metic. 

The efforts of the American Government to teach the ignorant their 
civil rights and to uplift them to self-governing capacity finds only a 
languid sympathy from many of the " ilustrados." From them comes 
the only objection to teaching English to the common people, lest they 
lose their national character ; as if it were necessary to keep the people 
confined to 16 barbarous dialects in order that they should be dis- 
tinctly Filipino. The real motive for the objection, whether con- 
scious or not, is in the desire of the upper class to maintain the rela- 
tion of the ruling class to the serving and obedient class. 

The educated Filipino has an attractive personality. His mind is 
quick, his sense of humor fine, his artistic sense acute and active; he 
has a poetic imagination; he is courteous in the highest degree; he 
is brave; he is generous; his mind has been given by his education 
a touch of the scholastic logicism ; he is a musician ; he is oratorical 
by nature. 

The educated Filipino is an aristocrat by Spanish association. He 
prefers that his children should not be educated at the public schools, 
and this accounts for the large private schools which the religious 
orders and at least one Filipino association are able to maintain. 
In arguing that the Philippines are entirely fit for self-government 
now, a committee of educated Filipinos once filed with the civil gov- 



25 

ernor a written brief in which it was set forth that the number of 
" ilustrados " in the Islands was double that of the offices — central, 
provincial, and municipal — and therefore the country afforded two 
" shifts " of persons competent to run the government. This, it was 
said, made clear the possibility of a good government if independence 
was granted. The ignorance of the remainder of the people, admitted 
to be dense, made no difference. I cite this to show of how little im- 
portance an intelligent public opinion or an educated constituency is 
regarded in the community and government which many of the edu- 
cated Filipinos look forward to as a result of independence. I do not 
say that there are not notable exceptions to this among leading 
Filipinos, but such persons are usually found among those who are 
not so impatient to lose American guidance in the government. In- 
deed, I am gratified to hear that the first bill which passed the Assem- 
bly was an appropriation of a million pesos for barrio schools. On 
the whole, however, there is reason for believing that were the govern- 
ment of the Islands now turned over to the class which likes to call 
itself the natural ruling class, the movement initiated by the present 
government to educate the ignorant classes would ultimately lose its 
force. The candor with which some of the representatives of the 
independista movement have spoken of the advantage for govern- 
mental purposes of having 80 per cent of the people in a serving or 
obedient class indicates this. 

No one denies that 80 per cent of the Filipino people are densely 
ignorant. They are in a state of Christian tutelage. They are child- 
like and simple, with no language but a local Malay dialect spoken in 
a few provinces; they are separate from the world's progress. The 
whole tendency under the Spaniards was to keep them ignorant and 
innocent. The Spanish public school system was chiefly on paper. 
They were for a long time subject completely to the control of the 
Spanish friar, who was parish priest and who generally did not 
encourage the learning of Spanish or great acquantance with the 
world at large. The world owes to the Spanish friar the Christiani- 
zation of the Filipino race. It is the only Malay or oriental race that 
is Christian. The friars beat back the wave of Mohammedanism 
and spread their religion through all the Islands. They taught the 
people the arts of agriculture, but they believed it best to keep them 
in a state of innocent ignorance. They did not encourage the coming 
into the Filipino local communities of Spaniards. They feared the 
influence of world knowledge. They controlled the people and 
preached to them in their own dialects. They lived and died among 
them. 

The friars left the people a Christian people — that is, a people with 
Western ideals. They looked toward Rome, and Europe, and America. 



26 

They were not like the Mohammedan or the Buddhist, who despise 
Western civilization as inferior. They were in a state of tutelage, ripe 
to receive modern Western conceptions as they should be educated to 
understand them. This is the reason why I believe that the whole 
Christian Filipino people are capable by training and experience of 
becoming a self-governing people. But for the present they are igno- 
rant and in the condition of children. So, when the revulsion from 
the Spanish domination came, as it did, the native priest or the 
neighboring " ilustrado " or " cacique " led them into the insurrection. 
The}^ are a brave people and make good soldiers if properly led. 
They learn easily, and the most striking fact in our whole experience 
in the Philippines is the eagerness with which the common Filipino 
agricultural laborer sends his children to school to learn English. 

There is no real difference between the educated and ignorant Fili- 
pinos that can not be overcome by the education of one generation. 
They are a capable people in the sense that they can be given a normal 
intellectual development by the same kind of education that is given 
in our own common school system. Now they have not intelligence 
enough to exercise the political franchise with safety to themselves 
or their country ; but I do not see wiry a common school education in 
English, with industrial teaching added, may not make the children 
of these people capable of forming an intelligent public opinion needed 
to sustain a popular government if, at the same time that the on- 
coming generations are being educated in schools, primary and indus- 
trial, those who are intelligent are being given a political education 
by actually exercising the power of the franchise and actually taking 
part in the government. 

As will be seen hereafter, the Philippine government has not funds 
enough to educate in primary and industrial schools all the present 
generation of school age, and unless, some other source of funds than 
governmental revenues is found it will take longer than a generation 
to complete the primary and industrial education of the common 
people. Until that is done, we ought not to lift our guiding hand 
from the helm of the ship of state of the Philippine Islands. With 
these general remarks as to the present unfitness of the Filipino 
people for popular self-government and their capacity for future 
development so that they ma} T , by proper education, general and 
political, become a self-governing people, I come to the methods pur- 
sued by the Philippine government in furnishing to the Filipinos 
the necessary education. I shall consider the subject under two 
heads: 

1. Education in schools for the youth of school age. 

2. Practical political education by the extension, step by step, of 
political control to an eligible class. 



27 
first: education in schools. 

Reference has already been made to the fact of the very great 
ignorance and illiteracy that prevails among the Filipino people. It 
is not too much to say that knowledge of Spanish is a fairly good 
indication whether an individual can be said to be educated. Sta- 
tistics show that but 7 per cent of the people of the Islands speak 
Spanish; all the others speak in the varying dialects, which among 
the civilized people number some 16. The Philippine people should 
be educated sufficiently to have a common medium of communica- 
tion, and every man, woman, and child should have the benefit of 
the primary education in that common medium. Reading, writing, 
end arithmetic are necessary to enable the rural laborer and the small 
hemp, cocoanut, or tobacco farmer to make contracts for the sale of 
his products and to know what price he should receive for that which 
he has to sell. *With this knowledge, too, he will soon be able to know 
his own rights and to resist the absolute control which is now fre- 
quently exercised over him by the local cacique. 

The necessity for a common school system was emphasized in the 
instructions of President McKinley to Secretary Root, and those re- 
sponsible for the government of the Islands have been earnest and 
active in seeking to establish one. The language selected for the 
schools is English. It is selected because it is the language of busi- 
ness in the Orient, because it is the language of free institutions, and 
because it is the language which the Filipino children who do not 
know Spanish are able more easily to learn than they are to learn 
Spanish, and it is the language of the present sovereign of the Islands. 
The education in English began with the soldiers of the American 
Army, one of whom was detailed from each company to teach schools 
in the villages which had become peaceful. When the Commission 
assumed authority it sent to the United States for 1,000 American 
teachers, and after the arrival of these pioneers in the Islands, a 
system of primary schools was inaugurated together with normal 
schools. 

Public educational work in the Islands is performed under the 
bureau of education, with the central office located in Manila, hav- 
ing 37 divisions, each in charge of a division superintendent, embrac- 
ing in all 379 school districts each in charge of a supervising teacher. 
The total number of schools in operation during the past year was : 
Primary schools, 3,435; intermediate schools, 162; arts and trades 
schools, 32 ; agricultural schools, 5 ; domestic-science schools, 17, and 
provincial high schools, 36, making a total of 3,687 and an increase 
from the previous year as follows: 327 primary schools, 70 inter- 
mediate schools, 15 arts and trades schools, 3 agricultural schools, and 



28 

9 domestic-science schools. There are engaged in the teaching of 
these schools at present 717 permanent American teachers and 109 
temporary appointees, and all of these are paid out of the central 
treasury. In addition to these there are what are known as Filipino 
insular teachers, numbering 455, who are paid out of the central treas- 
ury. In addition to these there are 5,656 municipal Filipino teachers, 
all of whom speak and teach English and who are paid out of the 
treasuries of the municipalities. 

The 6,000 Filipino teachers who are now teaching English have re- 
ceived their English education from our normal schools or our Ameri- 
can teachers. Their number is growing, and they represent and are 
the most valuable educational asset we have acquired in working out 
our school system. The average annual salary of the Filipino insular 
teacher is 533.2 pesos a year, while that of municipal teachers is 210.36 
pesos. The Filipino insular teachers are drawn from graduates of nor- 
mal schools and also from the students sent by the government and at 
the expense of the government to the. United States to be educated 
there. Forty-six of these students have recently returned from the 
United States and have been appointed as insular teachers at salaries 
ranging from 840 to 960 pesos per annum. The average paid to the 
American teacher is about $1,200 per annum. The total enrollment 
for the year, inclusive of the Moro Province — the schools in which 
are conducted under a separate system — was 479,978. This was 
in the month of March at the close of the school year, when the 
enrollment reached its highest point. The average enrollment total 
by months was 346,245, of whom 62 per cent were boys and 38 per 
cent were girls. The average daily attendance was 269,000, or a per- 
centage of attendance of about 85 per cent. The highest percentage 
of attendance was 94, in the city of Manila. The lowest percentage 
in some of the provinces was 78. The attendance and enrollment in 
schools begins in August, which is the beginning of the school year, 
and ends in March. As August is one of the wet months, the attend- 
ance begins at the lowest figure and increases gradually into the dry 
season until its highest point at the close of the school year in March. 

The central government this year for school purposes and construc- 
tion of schools has appropriated 3,500,000 pesos. The maintenance of 
primary schools is imposed by law upon the municipalities, and in- 
volves a further expenditure of nearly a million and a half pesos. In 
order to relieve distress incident to agricultural depression, it was 
found necessary to suspend the land tax, a part of the proceeds of 
which by mandatory provision of law was appropriated to the support 
of municipal schools. The central government in the first year appro- 
priated a sufficient sum from the internal revenue to meet the deficit 
caused by the failure to impose the land tax, but in the present year 
it was only able to appropriate 50 per cent of the amount which 



29 

would have been raised by the land tax, and next year no such appro- 
priation will be made, and it will be left optional with the province 
whether the land tax shall be imposed or not. 

The great difficulty in the matter of education in the Islands is the 
lack of funds to make it as extended as it should be. The suspension 
of the land tax is subjecting the educational system to a crisis, but 
the revival of agriculture in many parts of the Islands leads to the 
hope that the crisis may be successfully passed. It would be entirely 
possible to expend for the sole benefit of the Philippine people, with- 
out the least waste, upward of two or three millions of dollars annu- 
ally in addition to all that the government of the Philippine Islands — 
central, municipal, and provincial — can afford to devote to this 
object. We are not able to educate as they should be educated more 
than a half of the youth of school age in the Islands. The govern- 
ment, while contributing to the maintenance of high schools in each 
province, is devoting its chief attention to the spread of primary 
education, and in connection with primary education, and, at its 
close in the intermediate schools, to industrial education. Primary 
and industrial education carried on until the child is 14 or 15 
years old is thought to be the best means of developing the 
Filipino people into a self-sustaining and self-governing people, 
and the present government has done all that it has been pos- 
sible to do in developing and maintaining a proper system for this 
purpose. The tendency toward the development of industrial educa- 
tion the world over has created such a demand for industrial teachers 
as to make it impossible for the Philippine government to secure as 
many as are needed for the purpose in the Islands, and in order to 
have these industrial teachers it must take the time to educate them 
as such, just as it did the Filipino primary teachers in English. 

There are now in the Islands, including art and trade schools, agri- 
cultural schools, and domestic-science schools, at least one industrial 
school to every province, and it is the purpose to increase this number 
as rapidly as resources and opportunity will permit. Under the in- 
fluence of the traditions of the Spanish regime, when manual labor 
seems to have been regarded as an evidence of servitude, it was at 
first impossible to secure pupils for the great manual training school 
in Manila. Boys preferred to be " escribientes " or clerks and gentle- 
men rather than to learn to win a livelihood by the skill of their 
hands, but this has been rapidly overcome. In the insular school 
of arts and trades in Manila, where the plant and equipment is quite 
satisfactory, instruction is now given some 350 pupils in English, 
arithmetic, geography, mechanical drawing, woodworking (bench 
work, carving, turning, and cabinet making), ironworking (bench 
work, filing, blacksmithing, and iron machine work), and finishing, 
including painting and varnishing, to which will be added next year 



30 

boat building and wheelwrighting. At the present time there are on 
the waiting list some 200 pupils who seek admission but for whom 
no places are available. A large insular agricultural school is to 
be established in Manila for giving instruction in practical agricul- 
ture, and the money, 100,000 pesos, necessary for the building and 
construction has already been appropriated. 

The influence of the primary instruction in English is shown 
throughout the Islands by the fact that to-day more people through- 
out the Islands, outside of Manila and the large cities, speak Eng- 
lish than speak Spanish. A noticeable result of the government's 
activity in the establishment of English schools has been the added 
zeal in teaching English in private educational establishments. A 
Filipino school managed and taught only by Filipinos, called " Liceo," 
has some 1,500 pupils in Manila, and English is regularly taught as 
part of the curriculum of that school ; the Dominican order of friars, 
which is primarily an educational order, has schools in and about 
Manila with upward of 2,000 students, and English is now made a 
very important part of the curriculum of those schools. The Jesuits 
also have two very large schools in Manila, embracing some 1,000 or 
1,500 pupils drawn from all parts of the Islands, in which English is 
made an important branch of the study. There is considerable com- 
petition in this matter and there seems now to be a united effort to 
spread the knowledge of English in accordance with the government's 
policy. At times, as already intimated, a discordant note is heard in 
the suggestion that the American Government is seeking to deprive the 
Filipino of his native language. As his native language is really 15 or 
16 different dialects, this does not seem a great deprivation. It is pos- 
sible that some effort will be made to include in the primary instruction 
the reading and writing of the local dialect in the local schools. No 
objection can be made to this unless it shall interfere with the instruc- 
tion in English, which it is hoped it may not do. 

Should Congress be anxious to facilitate and hurr}~ on the work 
of redeeming the Philippine Islands and making the Filipino people 
a self-governing community, it could take no more effective step than 
a permanent appropriation of two or three millions of dollars for 
ten or fifteen years to the primary and industrial education of the 
Filipino people, making it conditional on the continued appropria- 
tion by the Philippine government of the same amount to educa- 
tional purposes which it has devoted and is now devoting annually 
to that purpose. The influence of the educational s}^stem introduced 
has not only been direct in the spread of education among the younger 
of the present generation, but it has also been an indirect means of 
convincing the Filipino people at large of the beneficent purpose 
of the American Government in its remaining in the Philippine 
Islands and of the sincerity of its efforts in the interest of their people. 



31 

FILIPINO CADETS AT WEST POINT. 

Section 36 of the act of Congress, approved February 2, 1901. 
referring to Philippine Scouts, provides that — 

" Wlieu, in the opinion of the President, natives of the Philippine Islands 
shall, by their services and character, show fitness for command, the President 
is authorized to make provisional appointments to the grades of second and 
first lieutenants from such natives, who, when so appointed, shall have the 
pay and allowances to be fixed by the Secretary of War, not exceeding those 
of corresponding grades of the Regular Array.". 

As it is thought that better results will be obtained if a few young 
Filipinos, especially selected, be appointed to the United States Mili- 
tary Academy with a view to their being commissioned officers of 
scouts upon graduation, I strongly recommend that Congress, by 
appropriate legislation, authorize the appointment of seven young 
Filipinos, or one for about every million of inhabitants of those 
Islands, as cadets at the Military Academy at West Point. This 
action on the part of Congress would, in my judgment, tend to fur- 
ther increase the zeal and efficiency of a body of troops which has 
always rendered faithful and satisfactory services. 

second: practical political education. 

There is no doubt that the exercise of political power is the best 
possible political education and ought to be granted whenever the 
pupil has intelligence enough to perceive his own interest even in a 
rude practical wa3^, or when other competent electors are sufficiently 
in the majority to avoid the injury likely to be done by a government 
of ignorance and inexperience. The Philippine government con- 
cluded that the only persons in the Philippines who had intelligence 
enough to make their exercise of political power useful to them as 
an education and safe as a governmental experiment were those who 
spoke and wrote English or Spanish, or who paid $7.50 a year taxes, 
or whose capacity had been recognized in Spanish times by their 
appointment as municipal officials. Adult males who came within 
these classes, it was thought, ought to begin their political education 
by assuming political responsibility, and so they were made electors 
in municipal, provincial, and assembly elections, and embraced, as 
near as it can be estimated, about 12 to 15 per cent of the adult male 
population. Of course, as the common school education spreads, the 
electorate will increase. 

Let us now examine the political education which has been given 
in practice to these eligible electors and the results. 

MUNICIPALITIES AND PROVINCES. 

By the municipal code the old municipalities under the Spanish 
regime, which resembled the townships of the West and the towns of 



32 

New England, were authorized to reorganize under the American 
Government. They consisted generally of the poblacion, or the most 
centrally located and most populous settlement, with a number of 
barrios or outlying wards or villages, all within the municipality and 
under its control. The provisions of the code did not differ materially 
from those of similar codes in the United States, except that wherever 
possible and practicable the unobjectionable customs of the country 
were recognized and acquiesced in formally in the law. The towns 
were divided into classes and the salaries of the officials were limited 
accordingly. The provincial code provided for the organization of 
governments in the provinces which had been recognized as provinces 
under the Spanish regime. Under the original provisions of that 
code the government of the province — legislative and executive — was 
under a provincial board, consisting of a governor and treasurer and 
a supervisor of roads and buildings. Other appointed officers were 
provided, as the prosecuting attorney and the secretary of the prov- 
ince, who did not sit on the provincial board. The governor was 
originally elected by the councilmen of all the towns of the province 
assembled in convention, they themselves having previously been 
elected by the people. The treasurer and supervisor were each 
selected and appointed under the rules adopted in accordance with the 
merit system provided in a civil-service law, which was among the 
first passed by the Commission. 

One of the early difficulties in the maintenance of an efficient gov- 
ernment in the provinces was the poverty of the provinces and the 
lack of taxable resources to support any kind of a government at all. 
It was soon found that the provincial supervisor, who, it was hoped, 
might be an American •engineer, was too expensive a burden for the 
province to carry. For a time the district superintendent of educa- 
tion of the province was made the third member of the provincial 
board instead of the supervisor, whose office was abolished. This, 
however, did not work well, because the time of the superintendent 
was needed for his educational duties. Subsequently, therefore, it 
was thought wise to provide a third member of the board, who served 
with but little compensation and who was elected as the governor was 
elected. The system of electing the governor by convention of coun- 
cilmen of all the towns of the province was changed, so that now the 
governor and the third member of the board are elected by direct 
popular vote, while the treasurer is still appointed. It will be 
seen that, in this way, the government of the towns is completely 
autonomous, subject only to visitation and disciplinary action of the 
governor of the province and of the governor-general on appeal. 
The provincial government now, though not originally, is completely 
autonomous in the sense that a majority of the board which governs 



33 

the province are elected by the people. The duties of the provincial 
treasurer are burdensome, complex, and important to such a degree 
as to make it impossible thus far to find Filipinos who have been able 
to master the duties of the office and to give satisfaction therein, al- 
though there are quite a number of Filipino assistant treasurers and 
subordinates in the office of treasurer who give reasonable ground to 
expect that the American treasurers may be in a reasonable time 
supplanted by Filipino treasurers. 

The question now arises what has been shown in the government of 
these municipalities and of the provinces in respect to the capacity of 
the Filipinos for complete self-government in local matters? It is 
undoubtedly true that the municipalities would be much more effi- 
cient had the policy been pursued of appointing Americans to the 
important offices in the municipalities, but there would have been 
two great objections to this course, one that the municipal govern- 
ment would not have attracted the sympathetic attention of the peo- 
ple as the present municipalities have — and we would thus have lost 
a valuable element in making such government a success — and the 
other that the educational effect upon the people in training them for 
self-government would have been much less. 

When I say that the development of municipal government in the 
Philippines has been satisfactory, I am far from saying that it has 
been without serious defects. All I mean is that considering the two- 
fold object in view — first governmental, second educational — the re- 
sult thus far with all its shortcomings shows progress toward both 
ends and vindicates the course taken. 

Up to the time of our occupation, the government had represented to 
the Filipino an entity entirely distinct from himself with which he 
had little sympathy and which was engaged in an attempt to obtain as 
much money as possible from him in the form of taxes. He had been 
taught to regard an office as the private property of the person hold- 
ing it and in respect to which ordinary practice justified the holder 
in making as much profit from it as he could. The idea that a public 
office is a public trust had not been implanted in the Filipino mind by 
experience, and the conception that an officer who fails in his duty by 
embezzlement or otherwise was violating an obligation that he owed 
to each individual member of the public, he found it difficult to grasp. 
He was apt to regard the robbing of the government by one of its 
officers as an affair in which he had little or no interest and in which, 
not infrequently, his sympathies were against the government. As a 
consequence, the chief sense of restraint felt by municipal officials in 
handling public funds comes from a fear of inspection by the central 
government and its prosecution. The fear of condemnation by the 
public opinion of the local community has a much less deterrent force, 



34 

even if the official is to seek reelection. The sense of responsibility for 
the government they control and whose officers they elect is brought 
home to the people of a municipality with sloAvness and difficulty. 
This is the political education that is going on in the Filipino munici- 
palities. We are making progress, but we must be patient, for it is 
not the task of a day to eradicate traditions and ideas that had their 
origin in a system of government under which this people lived for 
centuries. 

Hence when we find that there is still a considerable percentage of 
Filipino municipal officers who have to be removed and prosecuted 
for embezzlement, we must not be discouraged. Early in the Amer- 
ican occupation we had to prosecute sixteen or seventeen American 
provincial treasurers for defalcations in public funds. It was bit- 
terly humiliating for the dominant race to furnish such an example, 
when we were assuming to teach the Filipinos the art of self-govern- 
ment. The American embezzlers were all promptly sent to Bilibid 
Penitentiary for long terms. This had an excellent effect upon both 
Americans and Filipinos in the Islands. The defalcations were due 
to a lack of good material available for these positions in the Islands. 
To-day the American provincial treasurers are of the highest order 
of public servants and are a credit to the American name. Their 
example has been of the utmost benefit in the training of Filipino 
municipal and provincial officials. 

Another difficult}^ arising from a similar cause that we have had to 
meet and overcome has been the disposition of municipal councils to 
vote all of the available funds for the payment of their own salaries 
and leave nothing for the improvement or repair of roads,, the con- 
struction of buildings, or the payment of school-teachers, and this 
although the law T may, by mandatory provision, have set aside certain 
definite shares of the public funds for such purposes. These evils 
have had to be remedied by placing the funds in the hands of the 
provincial treasurer so as to secure the payment of the amount re- 
quired by law to be devoted to educational purposes and b}^ imposing 
upon the discretion of common councils to vote salaries from their 
funds a limitation that the total of salaries shall not exceed a 
certain percentage of the total funds in control of the town. 

The people of the towns seem fully to appreciate the value of roads, 
but when it comes to exerting themselves and denying themselves 
for the purpose of securing the great benefit of good roads, they have 
not thus far nerved themselves to the sacrifice. Many miles of road 
have been constructed by the central government and then turned over 
to the municipalities for maintenance, with the result that in one or 
two years of the torrential rains the roads have become nothing 
but quagmires without any work of maintenance or repair done on 
them. One of the common means throughout the United States for 



35 

building roads or repairing them is to require all male adults to work 
upon the roads four or five days of the year, or perhaps a longer period, 
or to commute the work by payment of a tax. This would be the 
natural method of repairing roads in the Philippines; but the diffi- 
culty is that it was the method adopted by the Spaniards, and in the 
Spanish times the power of the local authorities to direct free labor 
upon the roads for a certain period of time was so greatly abused and 
perverted to the seeking of personal vengeance and the private profit 
of the local authorities that it has been impossible to obtain any 
popular support for a system based on the same principle, and good 
roads have been allowed to go to destruction rather than to run the 
risk of a recurrence of the old abuses. 

A difficulty in connection with the maintenance of roads may be 
mentioned here. The old-time method of transportation in the Phil- 
ippines was by a carabao or ox cart with a rigid axle and with solid 
wheels, the rims of which were so narrow as to cut like a knife into 
any road over which they traveled. Laws have been passed from 
time to time imposing a penalty for using wheels on public roads with 
tires less than a certain width, but it has not been possible to secure 
such an administration of the law by the provincial governments as 
to prevent the continuance of this abuse, although means have been 
taken to furnish at a very reasonable rate sets of wheels with tires 
of sufficient width to avoid road destruction. Local officials have been 
loath, when dependent for their continuance in office upon the votes 
of their fellow-citizens, to enforce a law the wisdom of which they 
fully recognize, but the unpopularity of which they also know. 

It has been found that sanitary measures can not be safely 
intrusted to municipal authorities for enforcement whenever emer- 
gencies arise, but that some local agency of the central government 
must be created for the purpose. At first full power was given to 
the municipality to determine by ordinance where cemeteries might 
be established, having regard to the health of the town. This proved 
a most convenient instrument for partisan abuse in the religious 
controversies arising between the Eoman Catholics and the Agli- 
payans. An Aglipayan municipal council would require by ordi- 
nance the immediate closing of a Roman Catholic cemetery, although 
it was not in the least dangerous to health, and then would permit 
an Aglipayan cemetery much nearer the town and in a really objec- 
tionable place. Partisans of the Roman Church in control of other 
municipalities would abuse their powers in the same way. The con- 
sequence was that the central and provincial authorities had to be 
given direct supervisory control of this matter. 

Another defect in many Filipino towns I have already referred to is 
the evil of caciquism. Too often the presidente and other town officers 
use their offices to subject the ignorant residents of their respective 



36 

towns to their business control in the sale of farm products. The 
officer acts as the middleman in the sale and takes most of the profit 
from his constituent. The evil is hard to reach because the same 
power which compelled the sale can usually compel silence and no 
complaint is heard from the victims until, dimly realizing the injustice 
done them, they resort to criminal outbreaks and bloody vengeance. 
While it is too much to hope for the complete eradication of this abuse 
until the laborer shall acquire enough education to know his rights 
before the law and how to assert them, there has been much improve- 
ment in this regard since the American occupation. 

The evil of caciquism shows itself in a more flagrant form when 
Filipino municipal or even provincial officials are. vested with gov- 
ernmental control over non-Christian tribes, or others not of their 
own race, scattered through the Christian Filipino provinces. These 
people living in small settlements are slowly working toward a bet- 
ter civilization under the influence of education and are capable of 
much greater progress if properly treated. Such settlements were 
originally placed under the regular Filipino provincial and munici- 
pal governments within whose territorial jurisdiction they happened 
to be, but the abuses and oppression to which tK*ey were subjected 
necessitated an entirely different policy with respect to them and the 
organization of separate governments controlled directly from Ma- 
nila under the interior department. Mr. Worcester, the secretary of 
the interior, has given especial attention to the care and development 
of these non-Christian tribes. It has been necessary to organize in 
Northern Luzon three or four subprovinces within the territorial 
limits of the Filipino provinces and to secure the protection of the 
non-Christians by the appointment generally of an American lieu- 
tenant-governor. This is also true in the province of Misamis and 
of Surigao in Mindanao, where it was found impossible to induce 
the provincial officers to spend the money appropriated out of the 
insular treasury for the benefit of the people for educational and 
road improvements directed by the central authority. The fact that 
the recent, and for a time seemingly incurable, tendency to disturb- 
ance in Samar has grown out of a similar cause in that island, I 
have already commented on in connection with another- subject. 

The city of Manila has not been given autonomous government. 
It is under the control of a municipal board of five persons appointed 
by the central government and is governed therefore as Washington 
or the City of Mexico is governed. In the proper improvement of 
Manila, some six or eight millions of dollars had to be expended and 
much business experience and foresight were required to build the new 
waterworks and the new sewer system, to repave the streets, to canalize 
the esteros, or creeks, to organize an effective police force and a new fire 
department. It was thought that it would not be safe to intrust the 



37 

conduct of such important business matters to a body selected by the 
electorate of Manila for the first time. The city of Manila has been 
well governed. Very large sums of money have been expended in 
most extensive improvements and not the slightest scandal or dis- 
honesty has been charged in any of the city administration. It has 
offered a most useful model for other municipalities in the Islands 
to follow and has lent her engineers, her policemen, and her fire- 
men to other towns to help the latter to better organization. 

This review of shortcomings in municipal governments in the Phil- 
ippines should not have the effect of discouraging those who are 
interested in the success of the experiment. They should be reminded 
that in the United States, municipal government has not been such a 
shining success. Moreover, the defects pointed out are not found in 
all Filipino towns. They have been referred to only to qualify prop- 
erly the statement, which I do not hesitate to make, that autonomous 
municipal governments are making good progress and are gradually 
accomplishing the purposes for which they were created, though not 
so efficiently as with a people more used to governing themselves, 
more trained and educated in the assertion of their rights, and imbued 
with a higher standard of public duty. When those responsible for 
the policy of autonomy in municipal and provincial governments as- 
sert that it is progressing successfully, they find their words to be 
construed by enthusiastic theorists, who are convinced a priori of the 
complete fitness of the Filipinos to govern themselves, as completely 
establishing the correctness of their view; and when, on the other 
hand, they point out the defects in such local governments they meet 
the cry made by pessimists and by thick and thin adherents of the 
English crown-colony system that this is an admission of failure and 
a concession that we have gone far too fast in intrusting local govern- 
mental power of the Filipinos. 

The truth, as I conceive it, lies between the two extreme positions, 
and while the policy a'dopted does not secure the best municipal 
government which might be secured under American agents, it does 
provide a fairly good government, with a training and experience 
and educational influence upon the people which is slowly but pro- 
gressively curing the defects incident to a lack of political training 
,and proper political ideals. The result indicates neither that the 
Filipinos are fitted at once for complete self-government nor does it 
justify the view that they may not be ultimately made capable of 
complete self-government by a gradual extension of partial self-gov- 
ernment as they may become more and more fit to exercise it. 

When we come to the provincial governments, we naturally have 
to deal with a higher order of public servants, and although we here 
and there find the defects I have described as occurring in municipal 
governments, they are less glaring and less discouraging. The truth 

22380—08 4 



38 

is, that with the guidance of the provincial treasurer, who is an 
American, and the sense of added responsibility that the presence of 
two Filipinos in the provincial board has instilled in them, the pro- 
vincial officials begin to take pride in the good condition of their 
province. This has been stimulated by close and constant correspond- 
ence between them and the central government at Manila, repre- 
sented by the assistant executive secretary, Mr. Frank Carpenter, in 
which provincial matters are discussed, by an annual conference of 
provincial governors at Manila, and by conditional contributions 
from the central government to provincial funds for various forms of 
provincial efficiency, and is evidenced by the greater amounts devoted 
by the provinces to the construction of public buildings, the repair 
and construction of roads and bridges and by the husbanding of 
resources and the keeping down of salaries. 

The system of examination of the finances of the municipalities 
and of the provinces is now, as conducted in the Islands, very com- 
plete, and in one large printed volume is published the balance sheet 
of every province and of every municipality in the Islands for each 
fiscal year, so that it is possible to take a bird's-eye view each year of 
the financial progress made in the management of each province and 
town. The improvement in the financial condition of the provinces 
over and above what it was four or five years ago itself speaks 
forcibly in favor of the progress which has been made by Filipinos 
in provincial government. 

One of the early difficulties in provincial government already 
pointed out was the lack of tax resources, which prevented payment 
of adequate salaries or the making of much-needed improvements. 
With the sympathetic aid and suggestion of the central government, 
and by the voluntary assumption of greater taxes by the people, 
all the provinces, save two or three, have made themselves self- 
supporting and have been enabled to pay good salaries. They differ 
largely in the amount of money that they have been able to devote 
to the construction of public buildings and to roads and bridges, but 
they are certainly beginning to appreciate the necessity for effort in 
this direction, and while they have refused thus far to adopt the 
system of a few days' enforced labor commutable by taxes, they are 
gradually coming to the adoption of a poll tax for public roads 
which in its essence and its alternatives will ultimately be an equiva- 
lent of such a system. 

The report of the Auditor of the Islands shows a most gratifying 
improvement in the financial condition of the towns and provinces 
for the last five years. While the financial condition is not invariably 
indicative of the general character of a municipal or provincial gov- 
ernment, a steady improvement in it from year to year is reasonably 
good evidence that matters of government are mending in every way. 



39 

The question of roads and bridges has not yet been solved in the 
Philippines. There remains yet an enormous amount of labor and 
capital to be expended for this purpose, but the seeds have been sown 
which I am convinced will lead, under the executive force and 
great interest of Mr. W. Cameron Forbes, the secretary of com- 
merce and police, to the adoption of a caminero system of road 
repairs and maintenance which will make the intercommunication 
by wagon road between the various parts of the various islands satis- 
factory. I shall not stop to dwell on the great inherent difficulty 
that there is in the construction and repair of roads in the Philip- 
pines. The absence of suitable material and the destructive effect 
of every wet season sufficiently account for the present unsatisfactory 
condition in this respect. The principle rigidly adopted and enforced 
now is, however, that no bridge and no public building shall be con- 
structed of anything but permanent materials — either concrete, hard 
wood, or metal — or iron or steel, and that no road shall be built except 
in a manner which shall enable local authorities, with reasonable ex- 
pense, to keep it in permanent repair. In times past the necessity for 
haste and supposed economy has led to the use of softer woods and 
temporary methods of construction, which are now turning out to be 
much more costly than if the original expenditure had been greater. 

CIVIL SERVICE. 

The organization and maintenance of the central government were 
directed not onjy with a view to its efficiency, but also to its educa- 
tional effect upon the Philippine people. This is shown in the ap- 
pointment of three Filipinos to constitute three-eighths of the insu- 
lar legislature, as well as by the opportunity offered to Filipinos to 
enter the civil service under a civil-service law embodying the merit 
system. In the beginning it was difficult to work Filipinos into the 
bureaus of the central government, because few of them knew Eng- 
lish and fewer understood the American business and official methods, 
which, of course, obtained in the new government. As the years 
went on, however, under great pressure from the Commission, the 
proportion of Filipinos in the service was increased from j^ear to 
year. Many natives had learned English and had shown an in- 
creasing aptitude for the work of the civil service. Still in many 
of the bureaus the progress of Filipinos to the most responsible 
places is necessarily slow and the proportion of them to be found 
in the positions of high salaries is not as large as it ought to be in the 
near future. The winnowing-out process, however, is steadily reduc- 
ing the American employees in the civil service. It has become a 
body of highly deserving, faithful public servants, whom, it is hoped, 
the Philippine government will make permanent provision for by 



40 

secure tenure for a certain number of years with a reasonable retiring 
pension. 

As was inevitable in the complete organization of a government 
effected within a few months, experience indicated that greater econ- 
omy might be secured by a reduction in the number of bureaus and 
bureau chiefs, by the consolidation of offices and bureaus, and by the 
still further substitution of competent Filipinos for higher-priced 
Americans. 

It is now nearly three years ago, therefore, since a committee of 
insular officials with Commissioner Forbes as chairman was appointed 
to make a vigorous investigation into the entire governmental sys- 
tem. The committee made radical recommendations as to curtail- 
ment, most of which were adopted and resulted in a very material 
decrease in the cost of government and increase in the proportion of 
Filipino employees. 

Tn the department of justice, including the judiciary, the propor- 
tion of Filipinos had always been high. The chief justice of the 
supreme court and two of his associates were Filipinos, while nearly 
half of the judges of the courts of first instance were also natives. 
All but two of the prosecuting attorneys in the 35 provinces, all the 
justices of the peace, and nearly all the court officers were Filipinos. 
For two years the attorney-general of the Islands has been a Filipino. 

The changes in the proportion of Filipino civil servants to the 
whole number from year to year can be seen in the following table : 





Americans. 


Filipinos. 


1901 


2,044 


2,562 


1902 a 


1903 


2,777 
3,228 
3,307 


2, 697 
3,377 
4,023 


1904 


1905 


1906 a 


1907 


2,616 


3,902 





° Statistics not available. 



CIVIL RIGHTS. 



Before discussing the provision for the national assembly and its 
influences, educational and otherwise, I must refer to the effort of 
President McKinley to extend to the Filipinos the guaranties of life, 
liberty, and property, secured by the Federal Constitution to those 
within Federal jurisdiction. The guaranties assured in the instruc- 
tions of Mr. McKinley included all those of the Federal Constitution 
except the right to bear arms and to trial by jury. 

The right to bear arms is one that can not safely yet be extended 
to the people of the Philippines, because there are among those 
people men given to violence, who with the use of arms would at 



41 

once resort to ladronism as a means of livelihood. The tempta- 
tion would be too great and ought not to be encouraged. Nor are 
the people fit for the introduction of a jury system. Not yet has 
any considerable part of the community become sufficiently imbued 
with the sense of responsibility for the government and with its 
identification with the government. This responsibility and identi- 
fication are necessary before jurors can sit impartially between soci- 
ety and the prisoner at the bar. Without it they are certain always 
to release the prisoner and to sympathize with him in the prosecu- 
tion against him. The fair treatment of the prisoner is sufficiently 
secured in a country never having had a jury trial by the absolute 
right of appeal from the decision of a single judge to the decision 
of seven judges, with a writ of error thence to the Supreme Court 
of the United States. It may be that in the future it will seem wise 
gradually to provide for a jury in various classes of cases, but at 
present it would be premature. 

The civil rights conferred by Mr. McKinley's instructions were 
expressly confirmed by the organic act of July 1, 1902. It has been 
the purpose of the Philippine government to make the extension of 
these rights a real thing and a benefit for the poorer Filipino, and 
progress is being made in this direction. The great obstacle to it 
arises from the ignorance of the people themselves as to what their 
rights are and their lack of knowledge as to how those rights may 
be asserted. 

The work of impressing a knowledge of these things upon the 
people goes, however, rapidly on, and with the education in English 
of a new generation and their succession to the electorate, we can be 
certain that the spread of education as to popular rights and the 
means of maintaining them will be wider and wider, until we can 
have a whole community who know their rights, and knowing, dare 
maintain them. 

Charges have been made that the existing Philippine government 
has not properly preserved these guaranties of civil rights. It is true 
that the Commission has, in effect, suspended these guaranties in a 
condition equivalent to one of war in some of the provinces, and has 
been sustained in so doing by the supreme court of the Islands and 
,of the United States. It is also true that during a condition equiv- 
alent to war the Commission provided that no one should advocate 
independence, even by peaceable means, because agents of insurrec- 
tion were inciting actual violence under the guise of such peaceable 
propaganda. With the coming of peace, the statute ceased to have 
effect. To-day, however, the writ of habeas corpus runs without 
obstruction. The liberty of the press and of free speech is real. 
There is no censorship of the press and no more limitation upon its 
editors than there is in the city of Washington. The publication of 



42 

criminal libel or seditious language calculated and intended to cause 
public riot and disturbance is punishable in Manila and the Philip- 
pines as it is in many of the States of the Union. This freedom of 
discussion and this opportunity to criticise the government, educate 
the people in a political way and enable them more intelligently to 
exercise their political rights. 

THE NATIONAL ASSEMBLY. 

In recommending to Congress the provision for a national assem- 
bly contained in the organic act of the Philippine government, Sec- 
retary Eoot and the Commission were moved by the hope and belief 
that the promise in the act, conditioned, as its fulfillment was, 
on the existence of peace in the Islands, would stimulate activity 
on the part of all Filipinos having political ambition to bring about 
tranquillity. In this respect, as already pointed out, the result has 
abundantly vindicated their judgment. They were further moved 
by the conviction that this step toward greater popular self-gov- 
ernment would strengthen the hands of the Government by secur- 
ing from the people readier acquiescence in, and greater obedience 
to, measures which their representatives had joined in passing, than 
when they were the decrees of an alien government. They further 
believed that by means of the assembly much more exact and prac- 
tical knowledge of the needs of the country would be brought to the 
law-making power than in any other way. Finally, they thought 
that the inauguration of such an assembly would be a most impor- 
tant step in the main plan or policy of educating Filipinos in the 
science and practice of popular representative government. They 
were aware of the possible danger that this was a step too far in ad- 
vance. They did not deny that on the part of a number elected there 
would be a strong inclination to obstruct the smooth working of exist- 
ing government on lines of political and material progress. They 
anticipated the probability that in the first assembly elected the ma- 
jority would be in favor of immediate independence; but in spite of 
all this they were clear in their forecast that the responsibilities of 
power would have both a sobering and educational effect that would 
lead ultimately to conservatism of action and to strengthening the 
existing government. 

Let us now consider what has happened in the electoral campaign 
for the assembly and in its early life as a legislative body. 

The powerful influence for good and for peace exercised by the 
Federal Party in the period just after Mr. McKinley's second election 
I have dwelt upon at another place. The main purpose and prin- 
ciple of the party was peace under the sovereignty of the United 
States. In drafting a platform its leaders had formulated a plank 



43 

favoring the organization of the Islands into a Territory of the 
United States, with a view to its possibly becoming a State. From 
this plank it took its name. In the first two or three years after its 
successful effort to bring on peace, many prominent Filipinos having 
political ambition became members, and in the gubernatorial elec- 
tions the great majority of governors elected were Federals. And 
so substantially all who filled prominent offices in the government by 
appointment, including the judges, were of that party. Then dissen- 
sion arose among prominent leaders and some withdrew from the 
party. The natural opposition to a government party led to the 
organization of other parties, especially among those known as In- 
transigentes. The Federal Party had founded an organ, the Demo- 
cracia, early in its existence. The opponents of the government look- 
ing to immediate independence founded a paper called the Renaci- 
miento. The latter was edited with especial ability and with a parti- 
san spirit against the American Government. 

For two years before the election of the Assembly the Filipinos 
who sympathized with the Renacimiento were perfecting their organ- 
ization to secure a majority in the assembly. Many groups were 
formed, but they all were known as the Partido Nacionalista. There 
was some difference as to whether to this title should be added the word 
" inmediatista," but the great majority favored it. The party is gen- 
erally known as the Nacionalista Party. During much of these same 
two years, the Federal Party was dormant. The proposition for state- 
hood did not awaken enthusiasm anywhere. Many of the leaders were 
in office and felt no necessity for vigorous action. The quarrel between 
some of the directors had given the party paralysis. The party was 
not organized for political controversy with another party at the 
polls. It was merely an organization to give effective resultant 
force to the overwhelming feeling in favor of peace under United 
States sovereignty, and it was not adapted to a political fight on 
issues that were not in existence when it was at the height of its power 
for usefulness. On the other hand, in the Federal Party were many 
of the ablest and most conservative of the Filipinos, and it seemed 
wise that this nucleus should be used to form a party that represented 
conservatism on the issue as to independence, which the opponents of 
the government determined to force into the campaign for members 
of the assembly. It was an issue hardly germane to the subject- 
matter within the jurisdiction of the assembly, but it had to be met. 
The issue whether the Islands should have immediate independence 
turned on the question whether the Filipino people are now fit for 
complete self-government. Upon this question it was entirely 
natural that the burden should fall upon those who asserted the nega- 
tive, and it is not strange that the electors, or a majority of them. 



44 

should believe themselves and by their votes decide themselves to be 
competent. 

Some six months before the elections, there sprung from the ashes 
of the Federal Party a party which, rejecting the statehood idea, de- 
clared itself in favor of making the Philippines an independent nation 
by gradual and progressive acquisition of governmental control until 
the people should become fitted by education and practice under 
American sovereignty to enjoy and maintain their complete inde- 
pendence. It was called the Partido Nacionalista Progresista. It 
is generally known as the Progresista Party. The Progresista lead- 
ers were late in the field and were somewhat at a disadvantage 
on this account; but after they entered the fight they were ener- 
getic and vigorous. They did not mince words. They took the 
position fully and flatly that the people of the Philippines were not 
fitted for immediate independence and complete self-government 
and needed much education and experience before they should 
become so. It was natural to suppose that the cry of complete fitness 
for self-government was the popular one and that it would attract 
votes. This impression showed itself in a somewhat amusing way. 
The first independence party, as I have said, called itself the Partido 
Nacionalista Inmediatista. The title and organization were not rad- 
ical enough for a group that broke away and called itself Partido 
Nacionalista Urgentissima, which was supposed to indicate a party 
whose yearning for independence was greater than that of those who 
wished it immediately. This was followed by the organization of a 
new group who showed that they were not to be outdone in the 
fervor and anxiety with which they sought independence and votes 
for their candidates by calling their party Partido Nacionalista 
Explosivista. 

The campaign in the last two or three months was carried on with 
great vigor. The Nacionalistas had the advantage of being under- 
stood to be against the government. This, with a people like the 
Filipino people, who had been taught to regard the government as an 
entity separate from the people, taxing them and prosecuting them, 
was in itself a strong reason for popular sympathy and support. The 
Progresistas were denounced as a part}^ of officeholders. The gov- 
ernment was denounced as extravagant and burdensome to the peo- 
ple. In many districts the Nacionalista candidates promised that if 
they were returned immediate independence would follow. There 
were quite a number of candidates in country and remote districts 
where the controversy was not heated who did not declare them- 
selves on the main question, and maintained an independence of any 
party. They were known as Independientes. Then, there were other 
Independientes who declared themselves independent of party, but in 
favor of immediate independence. 



45 

The elections were held on July 30. Members were elected from 
80 districts into which the Christian Filipino provinces were 
divided. The result of the canvass was the election of 16 Progresis- 
tas, 1 Catolico, 20 Independientes, 31 Nacionalistas, 7 Inmediatistas, 
4 Independistas, and 1 Nacionalista Independiente, in all 80 members. 

The total vote registered and cast did not exceed 104,000, although 
in previous gubernatorial elections the total vote had reached nearly 
150,000. The high vote at the latter elections may be partly explained 
by the fact that at the same elections town officers were elected, and 
the personal interest of many candidates drew out a larger number 
of electors. But the falling off was also in part due, doubtless, to the 
timidity of conservative voters, who, because of the heat of the 
campaign, preferred to avoid taking sides. This is not a permanent 
condition, however, and I doubt not that the meeting of the assembly 
and the evident importance of its functions when actually performed 
will develop a much greater popular interest in it, and the total 
vote will be largely increased at the next election. 

I opened the assembly in your name. The roll of the members re- 
turned on the face of the record was called. An appropriate oath 
was administered to all the members and the assembly organized by 
selecting Senor Sergio Osmena as its speaker or presiding officer. 
Senor Osmena has been one of the most efficient nscals, or prosecuting 
attorneys, in the Islands, having conducted the government prosecu- 
tions in the largest province of the Islands, the province and island 
of Cebu. He was subsequently elected governor, and by his own ac- 
tivity in going into every part of the island, he succeeded in enlisting 
the assistance of all the people in suppressing ladronism, which had 
been rife in the mountains of Cebu for thirty or forty years, so that 
to-day there is absolute peace and tranquillity throughout the island. 
He is a young man not 30, but of great ability, shrewdness, high 
ideals, and yet very practical in his methods of dealing with men and 
things. The assembly could have done nothing which indicated its 
good sense so strongly as the selection of Senor Osmena as its presid- 
ing officer. 

Many successful candidates for the assembly seem to have embraced 
the cause of the Inmediatistas without having thought out deliber- 
ately any plan by which a policy of immediate independence could be 
carried out. They joined the party and united in its cry because it 
was a popular one and because they thought that this was an easy 
method of being elected, or rather because they thought that without 
this, election would be difficult. When the assembly met it was quite 
apparent that the great majority were much more anxious to vindi- 
cate their election as a dignified, common-sense, patriotic branch of 
the legislature by a conservative course than to maintain consistency 
between their acts as legislators and their ante-election declarations. 



46 

There are, of course, some members who are likely at times to make 
speeches containing violent language, but on the whole there seemed 
to be during my stay in the Islands, of two or three weeks after the 
organization of the assembly, a very earnest wish that the assembly 
should show the conservatism which many of us believe exists in the 
Philippine people, rather than it should give a weapon to the enemies 
of the people and popular government by extravagance and useless 
violence of speech. 

Since I left the Islands the Assembly has voted for two resident 
commissioners to represent the Islands at Washington as provided in 
the organic act of the Philippine government. These commissioners 
are elected by the Assembly and the Commission sitting in separate 
session. The two candidates tendered by the Assembly to the Com- 
mission and accepted by the latter were Mr. Benito Legarda, at pres- 
ent one of the Filipino Commissioners, and Mr. Pablo Ocampo, of 
Manila. Mr. Legarda is one of the founders of the Federal Party 
and a Progresista. He has been many times in the United States and 
speaks English. He is one of the most prominent and successful 
business men in the Islands, and a public-spirited citizen of high 
character. Mr. Ocampo was an active sympathizer with the insurrec- 
tion and acted as its treasurer. He was deported to the island of 
Guam by the military authorities in the days of the military govern- 
ment. He is a prominent and able member of the bar of the Islands 
and a man of high character. He took part in the organization of 
the Nacionalista Party which he wished to have called Unionista. He 
is understood to have objected to the word " inmediatista " and to 
have withdrawn from the party on that account. 

As a shibboleth — as a party cry — immediate independence has 
much force, because it excites the natural pride of the people, but few 
of their number have ever worked out its consequences, and when 
they have done so they have been willing to postpone that question 
until some of the immediate needs of the people have been met. I 
may be wrong, but my judgment is that the transfer of real power by 
giving to the people part of the legislative control of the Christian 
provinces sobers their leaders with the sense of responsibility and 
teaches them some of the practical difficulties of government. They 
wish to vindicate their view in respect to their fitness to govern them- 
selves completely by exercising the power of the government which 
has been accorded to them in a way to make the people of the United 
States and of the world believe that when greater power is extended, 
they may be trusted to exercise that with equal discretion and con- 
servative common sense. They are now a real part of the government 
of the Islands. Nothing can be done affirmatively without the con- 
sent of the Assembly. They have been through one election and have 



47 

made election promises. Many of those promises, such as the prom- 
ises of immediate independence, were of course entirely beyond the 
authority of the promisers. When they go back to their constituents 
at the next election they will find facing them not only their ante- 
election promises, but also responsibility for legislation and failure 
to legislate which will introduce new issues of a practical character, 
and will necessitate explanation and a caution of statement that was 
entirely absent in the first campaign. All this can not but have a 
wholesome effect upon the politics of the Filipinos and the Philip- 
pines. I do not for a moment guarantee that there will not at times be 
radical action by the Assembly, which can not meet the approval of 
those who understand the legislative needs of the Islands, but all I 
wish to say is that the organization and beginning of the life of the 
Assembly have disappointed its would-be critics and have given 
great encouragement to those who were responsible for its extension 
of political power. 

The Inmediatistas, having a majority in the Assembly, are prone 
to divide into groups. The Independientes are organizing as a party, 
drawing tighter party lines, and at times act with the Progresistas, 
who, with their 17 votes, are enjoying the advantage of the minority 
party in maintaining a solidarity and party discipline that it is im- 
possible for the leaders of the majority and the controlling party 
to attain. It would not be surprising if at the next election there 
should be a readjustment of party lines and division on other issues 
than those which controlled at the first election. 

While I was in the Islands, provincial elections were held, at which 
were elected governors and third members of the provincial boards. 
The elections were held on party lines. The total vote exceeded 
that at the Assembly by more than 50 per cent. Of the governors 
elected, 15 were Nacionalista and 15 were Progresista. Of the third 
members, 15 were Nacionalista, 13 were Progresista, and 2 were of 
unknown party affiliation. From this it would seem that the Naciona- 
lista victory in the assembly election should not be taken as an assur- 
ance that a permanent majority of the electors will continue to favor 
immediate independence. 

The Assembly has shown a most earnest desire, and its leaders 
have expressed with the utmost emphasis their intention, to labor 
for the material prosperity of the Philippines and to encourage the 
coming of capital and the development of the various plans for the 
improvement of the agriculture and business of the Islands which 
have commended themselves to those in the past responsible for the 
government there. In other words, thus far the Assembly has not 
manifested in any way that obstructive character which those who 
have prophesied its failure expected to see, and who, in this respect, 



48 

paradoxical as it may appear, are equally disappointed with those 
anti-imperialists who have hopefully looked to the Assembly as a 
means of embarrassing the present government. 

The organization of the Assembly is one of the great steps in the 
education of the Filipino people for complete self-government. One 
of the assumptions which must be guarded against, but which we 
always encounter, is that the conservative and successful use by the 
people of an instrumentality like that of the national Assembly is 
convincing proof of the people to enjoy greater power and reason 
for an instantaneous granting of that power. This is at variance 
with the theory upon which the power is granted. That theory is 
that the use of such an instrument is valuable chiefly as a means of 
educating those who use it to the knowledge of how it ought to be 
used and to conservatism in its use. The fact that on receiving it 
the people use it conservatively is by no means sufficient proof that 
if it were not subject to ultimate control, guidance, and restraint 
by the agents of the United States, it might not be misused. It is 
most encouraging to find it conservatively used and vindicates those 
who urged its adoption, but it is far from demonstrating that this 
conservative use, subject to the limitations upon its power which now 
exist and which have a necessary tendency to make its use conserva- 
tive, would be preserved under conditions in which those limitations 
were entirely removed. The moderate use of such an Assembly for a 
reasonable time may properly form a ground for the greater exten- 
sion of power and the removal of some of the limitations. Progress 
in such a matter to be safe must be gradual. 

I can not refrain from saying at this point that the attitude of the 
national Assembly has been much influenced by the confidence that 
the members and the Filipino people have in the sense of justice and 
impartiality of Governor- General Smith and the deep sympathy 
which thej know he feels in their welfare and in their hopes of con- 
tinued progress. He knows the Filipino people better than any other 
American, and he spares no effort to reconcile their real needs and 
their earnest desires. 

I have reviewed the history of the governmental organization in 
order to show the consistency of the American Government in adher- 
ing to the policy laid down by President McKinley, of gradually ex- 
tending self-government to the Filipinos as they shall show them- 
selves fit. We first, therefore, have the autonomy of the municipality, 
restrained by the disciplinary action of the governor-general, the 
restraint upon the expenditure of its funds by the provincial treas- 
urers, and the audit of its funds by the central authority : second, the 
partial autonomy of the provincial governments in the election of a 
governor, the more complete autonomy by the constitution of the pro- 
vincial board of two elective members out of three, the restraint upon 



49 

the board by the presence of a member of the provincial board ap- 
pointed by the governor, the visitatorial powers of the governor- 
general for disciplinary purposes in respect of the provincial officers,. 
the restraining influence and assistance of the central constabulary 
force, the modification of complete American central control by the 
introduction of three appointed Filipinos into the Commission, fol- 
lowed after five years by the inauguration of a completely popular 
elective Assembly to exercise equal legislative power with the Com- 
mission. This progressive policy has justified itself in many ways, 
and especially in the restoration of order to which I have already 
referred. 

SANITATION. 

There is always present in every picture of Philippine progress 
as painted by those who have not carefully investigated the facts, a 
somber background of a baneful climate making it impossible for 
the American or European to live in health and strength in the 
islands for any length of time. It is true that the islands are in 
the Tropics, and that the variations in temperature are only about 
a third as much in extent as in the Temperate Zone ; but, for a tropi- 
cal climate, that of the Philippines is exceptionally comfortable and 
healthful. The monsoons blow six months from southwest across 
the islands and six months from the northeast, so that they are con- 
stantly windswept. This makes a radical difference between the 
climate of the islands and that of the lowlands of India for instance. 
The last two decades, especially the latter, have taught us much in 
respect to tropical diseases, their causes, their proper treatment, and 
the best method of avoiding them. This was one of the most valu- 
able results of the Spanish war. 

In his address as president of the Philippine Medical Association, 
in March, 1905, Dr. John E. McDill, who came first to the islands as 
a leading army surgeon and who left the Army to carry on a most 
successful practice in Manila, said : 

We have come to esteem to the utmost the climate which so effectually 
guards many of you against the too strenuous life and which is almost ideal 
eight months in the year, even in Manila. Our professional experience has 
proven that, excepting some intestinal disorders which we are rapidly prevent- 
ing and curing, and a limited amount of epidemic infectious diseases, there 
is nothing unusual about the kind or amount of disease encountered here, or its 
successful treatment when hospital care is available. The surgeon's work has 
fully demonstrated that ideal wound healing and convalescence after operation 
is as much the rule here as anywhere in the world. We physicians also know 
that, and appreciate that the dread diseases of childhood so prevalent at home 
are rare here, and that of all the ills particularly among women from real bodily 
ailments to a poor complexion for which the climate is usually blamed, the 
great majority are hereditary or acquired, were brought here by the patient 
and often aggravated by careless and unhygienic living. For old people and 



50 

children, the climate is an earthly elysium. * * * With the improved and 
constantly improving conditions of living, we believe that almost all will agree 
that by observing the normal and moral life, healthy Americans can live about 
as long here and enjoy as good health and do as much good and hard work, 
more than three-fourths of the year, as we could in the home land. 

The death rate among American soldiers in the Philippines for the 
last year was 8.5 per thousand, and the previous year 8.65. General 
Wood reports that the size of the sick report can not be properly 
charged to the climate, that, taken as a whole, the reports for the 
years indicate a decided improvement in health conditions, and that 
the men leaving the islands after a regular tour of more than two 
years present a far better appearance than those of the incoming. 

The death rate among American civilians in Manila for the fiscal 
year ending June 30, 1907, was 5.59 per thousand, a reduction from 
the previous year. The death rate among Filipinos this year in 
Manila w r as 36.9 per thousand and among Spaniards 15.84, both re- 
ductions from the previous year. 

During the decade of our stay in the islands, the conditions of 
life for Americans have steaclity bettered. We have become ac- 
quainted with hygienic methods of living, and the death rate of Amer- 
icans of the same social condition in the Philippines is certainly not 
greater than in the cities of the Southern States, and is, as we have 
seen, very much less than that among Filipinos. 

If the United States is to continue its governmental relations with 
the Philip pines for more than a generation, and its business and social 
relations indefinitely, the fact that Americans can live healthful lives 
in the Philippines is important of itself; but I have cited these sta- 
tistics and this expert opinion to show more than this — I believe that 
it has an important bearing upon another kind of progress possible 
among the Filipino people, and that it opens another important field 
of education for the American government to cultivate in the islands. 

No one can be in the Philippines long without realizing that as a 
race the Filipinos are small of stature, slight of frame and flesh, and 
with small powers of resistance to epidemic diseases. It has been sup- 
posed that because of their nativity the Filipinos were not subject to 
the malarial, intestinal, and dysenteric troubles that afflict Americans 
and Europeans, and that measures taken to avoid or cure such troubles 
in the case of the foreigner were unnecessary and superfluous with the 
Filipinos. Recent investigations of a systematic kind, carried on by 
keeping comparative statistics of all the official autopsies made in the 
islands, seem to show that the assumption that the Filipinos are im- 
mune from the forms of disease I have mentioned is without founda- 
tion. The autopsies of 100 cases showed in a great majority the germs 
of malaria, of amoebic dysentery, and that microbe of the so-called 
" lazy " disease of Porto Rico known as the "hookworm." It is true 



51 

that the diseases were not active or acute, but their presence in the 
system of course weakened the constitution of the subject and could 
easily explain his anaemic condition, his smallness of stature, and 
small powers of resistance. Malaria, of course, is produced or at least 
transmitted by the mosquito, while amoebic dysentery and the " lazy " 
disease are water-borne and proceed directly from the miserable 
sources of water supply in most Filipino towns. Proper precautions 
can avoid all these; or at least can greatly reduce the number of 
victims. 

In Manila, 60 per cent of all infants born die during the first year 
of their lives, and there is no reason to believe that infant mortality 
in other parts of the islands is less. This frightful percentage is 
brought about by ignorance and neglect of the mothers in feeding 
their babies. There are very few if any milch cows in the islands, and 
the little ones are fed with all sorts of impossible things. They die 
generally of a lack of nourishment. There is no reason why, if the 
mothers were correctly taught and proper infant food were brought 
within the reach of the poor, this awful rate of infant mortality 
might not be reduced. Not only is there an actual loss of life which 
might be avoided, but the babies which live through such treatment 
and nourishment are not apt to make strong men and women, but are 
likely to become victims of anaemia and other diseases mentioned as 
shown in the autopsies I have referred to. 

I do not think it is unjust to the Spanish regime in the Philippines 
to say that very little if any attention was paid to sanitation accord- 
ing to modern methods. In the city of Manila and in the other large 
towns of the islands the American military medical authorities, who 
were the first to assume responsibility for the health of the islands, 
found the same utter disregard of the proper rules for the dis- 
position of house sewage that was found in Habana. Thousands, yes, 
tens of thousands, of Filipinos were carried off year after year by a 
peculiarly virulent type of smallpox. 

In Manila, in Cebu, and in Nueva Caceres, respectively, were leper 
hospitals, but in each the management was inefficient and the care of 
the inmates poor. More than this, no supervision was exercised to 
isolate lepers not in hospitals. Some times the poor creatures were 
driven out of villages by popular riots and herded together with no 
proper food and no shelter. The contact of lepers with the people 
of course only increased the number of cases of the dread disease. 

In 1885 or 1886 the islands were visited by an epidemic of cholera 
and the prostration of the people of Manila and the Philippines, due 
to the rapid spread of the scourge, beggared description. In Manila 
the deaths were 1,000 or more a day from that cause alone for a num- 
ber of weeks. The trade proximity of Manila, Iloilo, and Cebu, to 
China, India, Java, Burma, and the Straits Settlements, makes the 



52 

danger of transmitting tropical and other infectious diseases very 
much greater. 

Quarantine in Spanish times was lax. The American Army med- 
ical authorities took hold of the matter of sanitation in their usual 
vigorous way and made much progress in the matter of quarantine 
and in correcting the glaringly insanitary conditions in Manila. But 
it remained for the civil government to effect a thorough organization 
of a health department which could do permanent good. 

The introduction of sanitary methods by law among the people 
has given rise to more dissatisfaction and greater criticism of the 
government than any other one cause. The truth is that the people 
have to be educated in the effectiveness of such methods before they 
can become reconciled to them, and the work of the health depart- 
ment since the beginning of the civil government in 1901 has been 
obstructed, first, by the inertia and indifference of the people in re- 
spect to the matter, and second, by their active resistance to affirma- 
tive restraints upon them necessary to prevent disease. 

The fight against smallpox has been so successful that in the past 
year not a single death from it occurred in Manila, and in the prov- 
inces of Cavite, Batangas, Cebu, Eizal, Bataan, La Laguna and La 
Union, where, heretofore there have been approximately 6,000 deaths 
per year not one was reported. In the few places in other provinces 
where smallpox appeared it made little headway. More than 2,000,- 
000 vaccinations against smallpox were performed last year, and 
vaccination is being carried on so that it will reach every inhabitant 
of the islands. 

In 1902 Asiatic cholera appeared. The loss the first year by reason 
of the methods introduced was much less than it had been fifteen or 
sixteen years before, but great difficulty was encountered in putting 
into force the health regulations and a futile attempt was made to 
establish quarantine between localities in the islands. Since that time 
a better system of isolation and stamping out the disease in the local- 
ity where it appeared has been followed, and it is gratifying to note 
that although the dread disease appeared each year, it was finally 
brought to an end on November 27, 1906, and the authorities now feel 
that the people have been so thoroughly roused to the best methods 
of treating the disease that any local reappearance of it can be readily 
suppressed. 

In 1902 or 1903 the bubonic plague appeared in the islands. This 
has been suppressed by the isolation of all persons suffering from the 
disease and the destruction of plague-infected rats so that during 
the last year there were no cases of bubonic plague whatever. 

Yrhen the Americans first began government in the Philippines it 
was reported that leprosy was so widely extended in the islands that 
there were probably from 25,000 to 50,000 lepers to be cared for. 



53 

After many unsuccessful efforts a leper colony has finally been estab- 
lished at Culion, a healthful and attractive island between Panay 
and Palawan, to which all the lepers of the islands are now being 
gradually removed. The number probably does not exceed 3,000. 
The course pursued is to take each province separately and by 
thorough investigation of the reported cases of lepers, determine 
those of true leprosy and to remove them thence to the colony of 
Culion. The experiment at first was a doubtful one because of the 
objection of the lepers to being taken so far away from their homes, 
and some of the friends of lepers made vigorous objections to this 
course. After the removal of the first 500, however, and when they 
found how comfortable and agreeable life at Culion was, the objec- 
tions ceased. Leprosy as a disease usually does not directly kill its 
victims, but it so weakens the powers of their resistance that the rate 
of mortality from other causes among lepers is very high. The sys- 
tem of isolation and withdrawing lepers from the thickly populated 
communities has been at once justified by the reduction in the number 
of new case. The number of known lepers in the archipelago on Sep- 
tember 1, 1905, was 3,580 ; on June 30, 1907, it was 2,826, a decrease of 
654, due to the death of the known lepers without any spread of the 
disease as had been the case in previous years and under different con- 
ditions. The policy of removal of lepers is one which can only be 
carried out gradually and has been applied only to a part of the 
provinces, but it will probably be completed in three or four years 
when all the lepers will be removed to Culion and the effect of this 
isolation will certainly be to reduce the infection of healthful persons 
with the awful disease to a minimum. 

The fruitful source of the spread of amoebic dysentery is the drink- 
ing of impure water. The water supply of Manila is drawn from 
the Mariquina Kiver after it has passed through three or four thickly 
populated towns and an immense amount of trouble and labor has 
been expended in trying to preserve the river from contamination by 
these towns. Military forces have been picketed along the banks and 
the most stringent regulations have been enforced against the inhabit- 
ants. Much has been accomplished in this matter, but still the water 
is dangerous to drink unless boiled and filtered. With a view to the 
removal of this difficulty, new waterworks are in the process of build- 
ing at a cost to the city of Manila of about two millions of dollars. 
The water is to be drawn from a point very much farther up the Mari- 
quina River, at a distance of about 25 miles from Manila, and is to be 
accumulated in a reservoir by damming the river at a point where 
nature apparently intended a dam to be put. Pure mountain water 
will thus be obtained which is to be carried to the city of Manila 
simply by the power of gravity. The new improvement is 80 per 
cent done and water will flow into the city probably by July of 1908, 
22380—08 5 



54 

In addition to this a new sewer system has been projected and is 
under construction in the city of Manila and 18 miles of the deep 
and main trunk sewers have been laid in the city. The mileage of the 
remainder of the sewers is very much greater, but the engineer esti- 
mates that about half of the work has been done. The project con- 
templates the establishment of reservoirs and the pumping of sewage 
out into the bay at such a distance as to prevent its retaining any 
noxious character. The difficulty of sewering Manila can be under- 
stood when it is known that the level of the ground in the city is 
only a few feet above high water mark. With the completion of the 
water and sewer systems and the canalization of the esteros or canals, 
with which the city is threaded, a work which is projected and which 
will cost about $400,000, there is no doubt that Manila will become 
as healthful a tropical city as there is in the world. 

The very high death rate in the city is due to the frightful mortal- 
ity among the native infants under 1 year of age already alluded to. 
The absence of pure milk for babes in the Philippines accounts for 
a good deal of this mortality, and a charitable organization has been 
established for the circulation at reasonable cost of milk for infants 
among both the poor and rich classes. The destruction of all the 
horned cattle by rinderpest has reduced the supply of milk and made 
it expensive. This adds greatly to the difficulty presented. The lack 
of nourishment makes the child an easy victim to any disease, and 
until Filipino mothers are taught properly to bring up their chil- 
dren, we may expect this infant mortality to continue, but it is 
subject to cure, and the methods adopted by the government and the 
charitable organizations, including the churches, whose interest is 
aroused, may be depended on to bring about a reform in this matter. 

It is a fact that throughout the islands too, a great deal of the 
mortality, among both children and adults, is due to water-borne 
diseases. The suppty of water in each village is generally contami- 
nated and noxious. The government has taken steps to induce every 
town to sink artesian wells for the purpose of giving its inhabitants 
pure water. Several well-boring machines have been purchased by 
the government and have been offered to the towns for use by them 
on condition of their supplying the fuel and the labor necessary. 
Wherever artesian wells have been sunk and a good supply of water 
found, the death rate in the town has been reduced 50 per cent. With 
a knowledge of the effectiveness of this 1 remedy, it is certain that 
the government will continue to press upon the towns the necessity 
of the comparatively small expenditure necessary to secure proper 
water, for it appears that in most towns in the islands artesian water 
is available. 

There is no reason why the whole Filipino race may not be made 
stronger and better by the pursuit of proper sanitary methods with 



55 

respect to the ordinary functions of life. The spread of education, 
the knowledge of cause and effect in this matter, together with the 
sympathetic assistance and regulation of the government are all that 
is needed to rid the Filipino of the obstructions to bodily growth and 
strength which injurious microbes and bacteria living in the body 
now create. The bureau of health and the bureau of science, which 
has actively aided the bureau of health in the investigations made, 
have now commended themselves to the Filipino people in such a way 
that there is every reason to hope that the foundation for better health 
in the islands has been permanently laid. 

The government has this year established and begun a Government 
Medical School, the faculty of which is made up partly of Filipinos 
and partly of Americans, and the most modern methods of instruction 
are projected. A fine laboratory, already erected near the place where 
the medical school building is to be constructed and a general govern- 
ment hospital in the immediate neighborhood will furnish a nucleus 
for the study of tropical diseases and the proper methods of sanita- 
tion. The graduates of this college as they grow in number and 
spread all over the islands into regions most of which have never 
known a physician at all will greatly contribute to the physical change 
and development for the better of the Filipino. 

The health department has been exceedingly expensive, and the 
amount taken from the treasury each year has been subject to much 
criticism, but the results are so gratifying that even the most cap- 
tious seems now willing to admit that the expenditure was wise, 
prudent, and justified. A most thorough quarantine has been estab- 
lished and maintained under the auspices of the United States Pub- 
lic Health and Marine-Hospital Service in the ports of entry in the 
islands. 

As is well understood now the mosquito is the means of communica- 
ting malaria and yellow fever and other diseases. It is supposed that 
the Stegomyia mosquito, which carries the yellow fever, is found in 
the Philippines, although no case of the fever has ever occurred in the 
Islands. The importance of the mosquito in the Philippines is con- 
fined to malaria at present. Varieties of the insect carrying most 
malignant malaria are found to generate in the salt-water marshes, 
though ordinarily it has been supposed that the Anopheles mosquito 
conveying malaria generated only in fresh water. The wet season 
seems to interfere with the operations of the mosquito by throwing 
so much water into the streams as to prevent the stagnation necessary 
to their successful propagation. A singular instance of this is found 
in the old walled city of Manila. The old walled city has a sewer 
system for storm or surface-water drainage. During the wet season 
there is practically no malaria in the walled city, but during the dry 
season there is a great deal. It has been found that in the dry 



56 

season in the absence of rainy weather the sewers contain stagnant 
pools in which the Anopheles mosquito is generated in great numbers 
and thus carries on his business of conveying malaria from one inhab- 
itant of the walled city to another, whereas in the rainy season the 
sewers are flushed all the time and there is no opportunity to the mos- 
quito to propagate. Measures have now been taken to flush the sewers 
of the walled city in the dry season and rid the inhabitants of this 
pest until the new sewer system shall be put in operation, when the 
evil can be entirely eradicated. 

BENGUET. A HEALTH RESORT. 

In all the tropical countries in which civilized government has been 
established and progress made toward the betterment of conditions 
of human life, places have been found and settlements effected in 
high altitudes where the conditions approximate in atmosphere and 
climate those of the Temperate Zone. This is true in India, in Cey- 
lon, in Java, an<i wherever there are neighboring mountains which 
offer the opportunity. 

The Philippines are fortunate in having a territory in Luzon in 
the mountains of an altitude ranging from 4,500 to 7,000 feet, a 
rolling country filled with groves of pine trees and grass, in which 
the temperature rarely goes below 40° and never goes above 80° in 
the shade. The province containing most of this territory is called 
" Benguet." Similar climate is found in the adjoining provinces of 
Lepanto and Bontoc. The railway from Manila to Dagupan has 
now been extended to what is called " Camp No. 1, " a distance of 22 
miles from Baguio, the chief town in Benguet, where is the govern- 
ment sanitarium and other places of resort and cure. At the cost of 
about two millions of dollars, the government has constructed a fine 
road up the gorge of the Bued Eiver to a height of 5,000 feet. The 
work would probably never have been entered upon, had it been 
supposed that it would be so costly, but now that it is done, and well 
done, the advantages accruing and soon to accrue, justify the expendi- 
ture. 

The representatives of all the churches in the islands have taken lots 
and are putting up buildings, hospitals of various kinds are to be 
erected, there is a sanitarium, the Commission holds part of its ses- 
sions there, and it is hoped that the assembly will see fit to do the 
same thing. A great many Filipinos recuperate by going to Japan 
or Europe, but here within easy distance of Manila will be offered an 
opportunity where the same kind of revitalizing atmosphere may be 
found as in a temperate climate. The Filipinos were at first dis- 
posed to criticise the expenditure on the ground that the road 
was built solely for the few American officials who expected to 
live there a large part of their time. The lots were offered at 
public auction and a great many were purchased by Filipinos, and 



57 



now it is generally understood that the value of such a place 
in the Philippine Islands has impressed itself upon the Filipino 
public at large. The present necessity is the construction of a 
railroad from Camp No. 1 directly into Baguio and steps have been 
taken to bring this about. A large military reservation has been set 
aside which it is hoped may be made into a brigade post for the re- 
cuperation of our soldiers while in the Philippines. The railroad is 
likely to have the patronage of those who spend part of their time 
at Baguio, going and coming from Manila and other parts of the 
islands, and also with the construction of a good hotel in Manila and 
another one at Baguio there is not the slightest reason to doubt that 
a large tourist patronage will be invited for both places. Mean- 
time the health-giving influence of the climate at Baguio can not 
but exercise a good effect upon the young Filipinos who may be sent 
there to be educated and upon those Filipinos who have been subject 
to tropical diseases and have the time and means for visiting this 
mountain resort. With the construction of a railroad, transportation 
to Baguio may be made exceedingly reasonable and sanitariums built 
which will furnish for very moderate cost a healthful regimen and 
diet. Benguet is really a* part of the system of government sanita- 
tion and may properly be mentioned in connection with it here. 

Comparative mortality from January 1, 1901, to September 30, 1907. 





1901. 


1902. 1903. 


1904. 


Month. 


Number 

of 
deaths. 


Annual 
death rate 
per 1,000. 


Number 

of 
deaths. 


Annual 
death rate 
per 1,000. 


Number 

of 
deaths. 


Annual 
death rate 
per 1,000. 


Number 

of 
deaths. 


Annual 
death rate 
per 1,000. 


January — 
February ... 

March 

April 

May 

June 

July 

August 

September . . 

October 

November . . 
December... 


753 
689 
885 
886 
903 
621 
608 
702 
767 
855 
848 
858 


a 36. 25 
a 36. 72 
a 42. 66 
a 44. 07 
a 43. 47 
a 30. 89 
« 29. 27 
a 33. 79 
a 38. 15 
a 41. 16 
a 42. 18 
a 41. 30 


~ 760 

706 

770 

1,327 

1,688 

1,418 

2,223 

1,712 

1,132 

927 

1, 035 

753 


a 36. 58 
a 37. 63 
«37.06 
a 66. 01 
a 81. 26 
a 70. 54 
a 107. 02 
a 82. 42 
" 56. 31 
a 44. 62 
a 51. 48 
a 36. 25 


602 
511 
539 
549 
770 
592 
620 
862 
1,228 
1,217 
974 
894 


a 28. 98 
a 27. 23 
a 25. 94 
a 27. 31 
a 37. 06 
a 29. 45 
6 33.21 
6 46.17 
b 67. 97 
6 65.19 
b 63. 91 
6 47.89 


796 

709 

751 

748 

766 

800 

866 

1,032 

1,064 

1,018 

957 

794 


* 42. 64 
b 40. 59 
b 40. 23 
6 41.40 
6 41.03 
6 44.28 
b 46. 39 
6 55.28 
b 58. 89 
b 54. 53 
b 52. 97 
b 42. 53 



Month. 



January .. 
February . 

March 

April 

May 

Jtrne 

July 

August 

September 
October . . . 
November 
December. 



1905. 



Number 

of 
deaths. 



685 
608 
563 
530 
526 
593 
747 
841 
,013 
850 
944 
841 



Annual 
death rate 
per 1,000. 



636.69 
636.05 
630.15 
629.32 
628.16 
632.81 
640.00 
645.03 
656.06 
6 45.51 
6 52.24 
6 45.03 



1906. 



Number 

of 
deaths. 



737 

595 
600 
555 
600 
693 
1, 451 
1, 182 
835 
684 
653 
597 



Annual 
death rate 
per 1,000. 



6 39. 47 
6 35. 28 
6 32. 13 
6 30. 27 
6 32. 13 
6 36.72 
6 77. 72 
6 63. 31 
6 46. 22 
6 36. 64 
6 36. 14 
6 31.98 



1907. 



Number 

of 
deaths. 



473 
464 
416 
462 
402 
515 
653 
768 



Annual 
death rate 
per 1,000. 



c 33. 31 
c 27. 59 
c 24. 45 
c 22. 65 
c 24. 35 
c 21. 89 
c 27. 14 
o 34. 41 
c41.82 



a Death rate computed on population of 244,732 (health department's census). 
6 Death rate computed on population of 219,941 (official census, 1903). 
c Death rate computed on population of 223,542 (health census, 1907). 



58 



Mortality compared with same period of previous years. 





First quarter. 


Second quarter. 


Third quarter. 


Fourth quarter. 




Number 

of 
deaths. 


Annual 
death rate 
per 1,000. 


Number 

of 
deaths. 


Annual 
death rate 
per 1,000. 


Number 

of 
deaths. 


Annual 
death rate 
per 1,000. 


Number 

of 
deaths. 


Annual 
death rate 
per 1,000. 


1901 


2,327 

2, 236 


42.93 
41 . 25 


2, 410 
4,433 
1,911 
2,314 
1,649 
1,848 
1,280 


43. 97 
80.89 
34.87 
42.22 
30.09 
33. 72 
22.98 


2, 077 
5,067 
2,710 
2,962 
2,601 
3,468 
1,936 


47.49 
91.46 
48.91 
53.46 
46.94 
62.59 
34.38 


2,561 
2, 715 
3,085 
2,769 
2,635 
1,934 


46.22 


1902 


29.00 


1903 


1,652 30.48 


55.68 


1904 


2,256 
1,856 
1,932 
1,569 


41.16 
34.24 
35.64 

28.48 


49.98 


1905 


47.56 


1906 


34.90 


1907 











MATERIAL PROGRESS AND BUSINESS CONDITIONS. 



I come now to material conditions in the islands and the progress 
that has been made in respect to them. While there is reason to hope 
that the mining industry may be very much improved and developed, 
the future of the islands is almost wholly involved in the development 
of its agricultural resources, and the business of the islands must 
necessarily depend on the question of how much its inhabitants can 
get out of the ground. In bringing about the reforms and making 
the progress which I have been detailing, the government has had to 
meet disadvantageous conditions in respect to agriculture that can 
hardly be exaggerated. 

The chief products of the islands are abaca, or Manila hemp as it 
is generally called, the fiber of a fruitless variety of banana plant; 
cocoanuts, generally in the form of the dried cocoanut meat called 
" copra ;" sugar, exported in a form having the lowest degree of po- 
larization known in commerce, and tobacco exported in the leaf and 
also in cigars and cigarettes. There are other exports of course, but 
these form the bulk of the merchantable products of the islands. In 
addition to these, and in excess of most of them except hemp, is the 
production of rice which constitutes the staple food of the inhabit- 
ants. Some years before the Americans came to the islands the pro- 
duction of rice had diminished in extent because the hemp fiber grew 
so much in demand that it was found to be more profitable to raise 
hemp and buy the rice from abroad. In the first few years of the 
American occupation, however, during the insurrection and the contin- 
uance of the guerrilla warfare, and finally the prevalence of ladron- 
ism, many of the rice fields lay idle and the importation of rice 
reached the enormous figure of twelve millions of dollars gold, or 
about four-tenths of the total imports. With the restoration of better 
conditions, the production in rice has increased so that the amount 
of rice now imported is only about $3,500,000 in gold, and the differ- 
ence between the two importations doubtless measures the increased 
native production of the cereal. 



59 

During the six years of American occupancy under the civil gov- 
ernment agriculture has been subject to the violent destruc- 
tion which is more or less characteristic of all tropical countries. 
The typhoons have damaged the cocoanut trees, they have at times 
destroyed or very much affected the hemp production, and drought 
has injured the rice as well as the cocoanuts. The character of the 
tobacco leaf has deteriorated much because of a lack of care in its 
cultivation due to the loose and careless habits of agriculture caused 
by war and ladronism, and locusts have at times cleared the fields of 
other crops without leaving anything for the food of the cultivators. 

The great disaster to the islands, however, has been the rinderpest, 
which carried away in two or three years 75 or 80 per cent of all 
draft cattle in the islands. This was a blow under which the agricul- 
ture of the islands has been struggling for now four or five years. At- 
tempts were made, under the generous legislation of Congress ap- 
propriating three millions of dollars to remedy the loss if possible, to 
bring in cattle from other countries, but it was found that the cattle 
brought in not being acclimated died, most of them before they could 
be transferred to the farm, and then too they only added to the diffi- 
culty of the situation by bringing new diseases into the Philippines. 
It has been found that nothing can restore former conditions except 
the natural breeding of the survivors, and in this way it will certainly 
take five or six years more to restore matters to their normal condi- 
tion. Meantime, of course, other means are sought and encouraged 
for transportation and for plowing. The difficulty in the use of 
horses is that an Indian disease called the " surra," which it has been 
impossible to cure, has carried off 50 per cent of the horses of the 
islands. Considering these difficulties, it seems to me wonderful that 
the exports from the islands have so far exceeded the exports in 
Spanish times and have been so well maintained that last year there 
was more exported from the islands than ever before in the history of 
the Philippines, as will be seen from the following table : 

Value of Philippine exports, 1903-1907 of American occupation. 



Fiscal year. 



Hemp. 



Sugar. 



Tobacco 
and manu- 
factures. 



Copra. 



All other. 



Total. 



j Dollars. 

1903 ! 21,701,575 

1904 ' 21, 794, 960 

1905 22, 146, 241 

1906 19,446,769 

1907 21,085,081 

Average annual 21, 234, 925 



Dollars. 

3, 955, 568 

2, 668, 507 
4,977,026 

4, 863, 865 

3, 934, 460 



Dollars. 
1, 882, 018 
2, 013, 287 

1. 999. 193 
2, 389, 890 

3. 129. 194 



Dollars. 
4,473,029 
2, 527, 019 
2,095,355 
4, 043, 115 
4, 053, 193 



Dollars. 
1, 107, 709 
1,246,854 
1, 134, 800 
1,173,495 
1,511,429 



4, 079, 885 



2,282, 716 



3,438,342 



1, 234, 857 



Dollars. 
33, 119, 899 
30, 250, 627 
32,352,615 
31,917,134 
33, 713, 357 



32, 270, 726 



Note.— Total exports do not include gold and silver coin. 



60 

The largest export showing in Spanish times, during years for 
which there are official statistics, was as follows: 

Value of Philippine exports in Spanish times, calendar years 1885-1 89 J/. 



Calendar year. 


Hemp. 


Sugar. 


Tobacco 
and manu- 
factures. 


Copra, i 


Total,, in- 
cluding all 
other arti- 
cles. 


1885 


Dollars. 

5, 509, 757 
4. 340, 058 
8, 161, 550 
8, 099, 422 
10, 402, 614 


Dollars. 
8, 669, 522 
7, 019, 978 
6, 156, 709 
6,271,030 
9, 101, 024 


Dollars. 
2, 297, 358 
2, 010, 093 
1,559,070 
2, 449, 181 
2, 255, 494 


Dollars. 


Dollars. 
20,551,434 


1886 


5,781 

36, 809 

131,347 

209,820 


20, 113, 847 


1887 

1888 

1889 


19, 447, 997 
19, 404, 434 
25, 671, 322 


Average annual 


7, 302, 680 


7, 443, 653 


2, 114, 240 


76,752 


21, 037, 807 


1890.... 

1891 


6. 925, 564 
10, 323, 913 

6,886.526 
7,697,164 

7, 243, 842 


7, 265, 030 
5, 696, 746 
7, 768, 595 
10, 368, 883 
5, 476, 617 


2, 469, 033 
2, 150, 306 
2, 535, 740 
2, 433, 304 
1,576,175 


85, 764 


21, 547, 541 
20, 878, 359 
19, 163, 950 


1892 


743, 918 

414, 652 

1, 172, 191 


1893 


22, 183, 223 
16, 541, 842 


1894 




Average annual 


7,815.402 

- 


7, 315, 174 


2, 232, 912 


483, 305 


20, 062, 983 





a Value of cocoanuts included. 

Note.— Figures are taken from "Estadistica general del comercio exterior de las Islas Filipinas," 
issued by the Spanish Government. 
Total exports include gold and silver coin. 

The chief export in value and quantity from the Philippines is 
Manila hemp, it amounting to between 60 and 65 per cent of the total 
exports. Its value has increased very rapidly of late and the result 
has been that much inferior hemp has been exported, because it could 
be produced more cheaply and in greater quantity. That which has 
made the hemp expensive and has reduced the export of it — for large 
quantities of it rot in the field still— is the lack of transportation and 
the heavy expense of the labor involved in pulling the fiber and free- 
ing it from the pulp of the stem. Several machines have been in- 
vented to do this mechanically and it seems likely now that two 
have been invented which may do the work, although they have not 
been sufficiently tested to make this certain. Should a light, portable, 
and durable machine be invented which would accomplish this, it will 
revolutionize the exportation of hemp and will probably have a ten- 
dency to reduce its cost, but greatly to increase its use and to develop 
the export business of the Philippine Islands most rapidly. 



SUGAR AND TOBACCO REDUCTION OF TARIFF. 

There is a good deal of land available for sugar in the Philippines, 
but there is very little of it as good as that in Cuba, and the amount 
of capital involved in developing it is so great that I think the pos- 
sibility of the extension of the sugar production is quite remote. The 
moment it expands, the price of labor which has already increased 50 to 
75 per cent will have another increase. All that can really be expected 



61 

is that the sugar industry— and this is also true of the tobacco indus- 
try — shall be restored to their former prosperity in the earlier Span- 
ish times when the highest export of sugar reached 265,000 tons to all 
the world. 

The tobacco industry needs a careful cultivation which, under 
present conditions, it is very difficult to secure. The carelessness with 
which the plant is grown and the defective character of the leaves is 
such as to make the manufacturers of cigars and tobacco in Manila 
despair of using the Philippine product without the addition of the 
wrappers either from Sumatra or the United States. • 

All that a friend of the Philippines can hope for is that the sugar 
and tobacco industries shall regain their former reasonably prosper- 
ous conditions. The development of the islands must be in another 
direction. The question of labor and capital both must always seri- 
ously hamper the growth of sugar production. Nor would I regard 
it as a beneficial result for the Philippine Islands to have the fields 
of those islands turned exclusively to the growth of sugar. The social 
conditions that this would bring about would not promise well for the 
political and industrial development of the people, because the cane 
sugar industry makes a society in which there are wealthy landowners 
holding very large estates with most valuable and expensive plants 
and a large population of unskilled labor, with no small farming 
or middle class tending to build up a conservative, self-respecting 
community from bottom to top. But, while I have this view in 
respect to the matter, I am still strongly of the opinion that jus- 
tice requires that the United States should open her sugar and 
tobacco markets to the Philippines. I am very confident that such 
a course would not injure, by way of competition, either the sugar or 
the tobacco industries of the United States, but that it would merely 
substitute Philippine sugar and tobacco for a comparatively small 
part of the sugar and tobacco that now comes in after paying- 
duty. Their free admission into this country would not affect the 
prices of sugar and tobacco in the United States as long as any sub- 
stantial amount of those commodities must be imported with the full 
duty paid in order to supply the markets of the United States. 

So confident am I that the development, which the sugar and 
tobacco interests of the United States fear in the Philippines from 
an admission of those products free to the United States, will not 
ensue to the injury of those interests that I would not object to a lim- 
itation on the amount of sugar and tobacco in its various forms, man- 
ufactured and unmanufactured, which may be admitted to the United 
States from the Philippines, the limitation being such a reasonable 
amount as would admittedly not affect the price of either commodity 
in the United States or lead to a great exploitation of the sugar and 



62 

tobacco interests in the islands. The free admission of sugar and 
tobacco up to the amount of the proposed limitation, for the purpose 
of restoring the former prosperity in these two products to the islands, 
is very important. There are two or three provinces, notably Occi- 
dental Negros and the island of Iloilo, the prosperity of which is 
bound up in good markets for sugar, and this is true also of some parts 
of Laguna, Cavite, Bulacan, and Pampanga, where sugar was raised 
in the old days with success and profit. In respect to tobacco, the 
need is not so pressing because the territory in which marketable 
tobacco culture prevails is by no means so great. Still it does affect 
three provinces, Cagayan, Isabela, and La Union. 

FODDER. 

The agricultural bureau of the government has been devoting a 
great deal of effort and time and money to experimenting in agri- 
culture. They have made many failures and have not yet succeeded 
certainly in sowing a grass which will properly cure and may be used 
for hay. It is hoped that in certain of the higher altitudes alfalfa, 
and especially clover, may be raised successfully ; and if so the very 
high price which has now to be paid for fodder imported from 
America may be avoided. This is a question which seriously affects 
the cost of the Army in the Philippines. 

NEW PLANTS. 

Through the agricultural bureau a new industry has been de- 
veloped, that of raising maguey, a plant, the fiber of which is much 
less valuable than that of Manila hemp, but which has a good market 
whenever it is produced in quantities. The rapidity with which a 
great deal of land in the Philippines that heretofore has not been 
capable of profitable use is now taken up with the planting of maguey 
is most encouraging. The plants are being distributed by the agri- 
cultural bureau in the islands. 

THE FINANCIAL CONDITION OF THE GOVERNMENT. 

The financial condition of the government is as good to-day as 
it ever has been. The following table shows what it is, and the sur- 
plus on hand for emergencies is satisfactory : 



63 

General account balance sheet of the government of the Philippine Islands for the fiscal 
- year ended June SO, 1907. 



Credit. 



Surplus and deficiency account: 

Balance from previous years 

Excess revenues over expenditures 

Excess resources over liabilities 

Carried from suspense account , 



Total 



Insular revenues and expenditures: 

Customs revenues 

Internal revenue 

Miscellaneous revenues 

Insular expenditures 

Payments to provinces 

Losses under section 41, act 1402. . 
Allowances under section 42, act 1402 
Inter-bureau transactions 



Total 

Excess revenues over expenditures 



Resources and liabilities: 

The insular treasurer's cash balance 

Gold-standard fund 

Surplus on customs auction sales 

Invalid money orders 

Outstanding liabilities 

Loans to provinces 

Refundable export duties 

City of Manila 

Outstanding warrants 

Friar lands funds 

Moro Province 

Depositary fund 

Silver certificate redemption fund 

Refundable internal revenues 

Public works and permanent improvement fund 

Congressional relief fund 

Sewer and waterworks construction fund 

Insular treasurer's liability on unissued silver certificates. 

Unissued silver certificates 

Miscellaneous special funds 

Provincial governments 

Philippine money-order account 

United States money-order aOcount 

Bonded indebtedness 

Outstanding postal drafts 

Friar land bond sinking fund 

Sewer and waterworks construction bond sinking fund 

Rizal monument fund 

Baguio town-site improvement fund , 

Collecting and disbursing officers 

Total 

Excess resources over liabilities 



Total 



Suspense account: 

Transfer of funds 

General account deposits 

Accountable warrants 

Carried to surplus and deficiency account 



Total 



Treasury account: 

Balance from previous fiscal years 

Receipts at the treasury 

Withdrawals from the treasury 

Available for appropriation 

Appropriations undrawn 

Available for refundment or redemption 

Total 



$7, 500, 782. 29 



7, 500, 782. 29 



6, 968, 724. 86 

1,438,440.40 

346. 20 

501. 38 



8, 408, 012. 84 
2,741,606.41 



11, 149, 619. 25 



25, 033, 490. 93 
1, 006, 753. 13 



481,137.55 
'3~66i"255."3i' 



670, 548. 06 
45, 646. 13 



2, 198, 249. 70 

" 9,' 762*566.' 66' 



106, 216. 92 



2, 384, 404. 42 



$4, 439, 974. 02 
2, 741, 606. 41 



319,201.1 



7, 500, 782. 29 



7,990,376.57 

2, 684, 579. 24 

389. 440. 25 



85, 223. 19 



11,149,619.25 



11, 149, 619. 25 



466.84 
2, 047. 14 
5, 229. 40 



413, 698. 89 
'l39," 136.' 45 



3, 956, 263. 00 

10,770,354.00 

331,970.30 



236, 934. 79 
1, 855, 081. 84 



9, 702, 500. 00 

387, 095. 17 

1,132,743.62 

182, 576. 54 

128, 201. 86 

14, 500, 000. 00 

2, 283. 29 



59, 898. 34 
1, 413. 20 
1,525.19 



51, 290, 202. 15 



51, 290, 202. 15 



319, 201. 86 



319, 201. 86 



22, 461, 858. 40 
112, 780, 022. 27 



135,241,880.67 



43, 789, 419. 86 
7,500,782.29 



51, 290, 202. 15 



7, 674. 49 
195, 263. 24 
116, 264. 13 



319, 201. 86 



110, 347, 526. 19 

5, 218, 817. 54 

4, 948, 919. 94 

14, 726, 617. 00 



135, 241, 880. 67 



64 

The following statement of revenues and expenditures of the Philip- 
pine government, exclusive of all items of a refundable character, 
covers the period from the date of American occupation, August 18, 
1898. to June 30, 1907. 

Revenues. 



Fiscal year ended June 30— 



Insular. 



1899 S3, 558, 682. 83 ' . 

1900 ; 6, 899, 340. 53 I . 

1901 1 10,753,459.95 . 



1902 
1903 
1904 
1905 
1906 
1907 



Total. 



9, 371, 283. 11 
10,757,455.63 

10, 249, 263. 98 

11, 549, 495. 37 
11,468,067.16 
11, 149, 619. 25 



Provincial. 



City 

of Manila. 



§2,008,480.88 
2, 527, 252. 93 

3, 295, 839. 47 
3, 107, 912. 91 

4. 509, 572. 02 
4, 604, 528. 31 



§1, 199, 593. 21 
1, 541, 575. 85 
1,931.129.97 
1,441.165.82 
1,995; 289. 85 
1,691,341.93 



756, 667. 81 



20, 053, 586. 52 9, 800, 096. 63 



Total. 



558, 682. 83 
899, 340. 53 
753, 459. 95 
579, 357. 20 
826,284.41 
476, 233. 42 
098, 574. 10 
972, 929. 03 
445, 489. 49 



115, 610, 350. 96 



Expenditures. 



1899 


$2,376,327.12 
4, 758, 793. 66 
6.451,528.37 
8,189,404.59 
10, 249, 533. 40 
11, 122, 562. 38 
12, 248, 857. 33 
10,146,779.12 
8, 408, 012. 84 







S2, 376, 327. 12 
4, 758, 793. 66 


1900 


1901 




:::::::::::::::: 


6,451,528.37 


1902 


SI, 633, 158. 22 
1,981,261.22 
2, 339, 826. 10 
1,474,320.43 
4,335.091.32 
4,736,038.20 


$622, 294. 81 
1,177,611.67 
1, 578, 303. 50 
2. 574, 102. 78 
2, 492, 392. 23 
1,560,801.40 


10, 444, 857. 62 
13, 408, 406. 29 


1903 


1904 


15. 040, 691. 98 


1905 


16. 297, 280. 54 


1906 


16. 974, 262. 67 


1907 


14, 704, 852. 44 






Total 


73, 951, 798. 81 


16, 499, 695. 49 


10, 005, 506. 39 


100. 457. 000. 69 







The bonded indebtedness is as follows : 



Title of bonds. 


Authorized by Congress. I ofJJ™* 


Date issued. 


Redeem- 
able. 


Due. 


Land purchase bonds 

Philippine public improve- 
ment bonds: 
First issue 


Act of July 1, 1902 $7, 000, 000 

Act of Feb. G, 1905 2, 500, 000 

do 1,000,000 


Jan. 11,1904 

Mar. 1,1905 

Feb. 1,1906 

June 1, 1905 


1914 

1915 
1916 

1915 

1917 


1934 
1935 


Second issue 


1936 


Manila sewer and water 
supply bonds: 


Act of Julvl.1902. as amend- 1, 000, 000 

ed bv act of Feb. 6, 1905. 
do* 2, 000, 000 


1935 


Second issue 


Jan. 2,1907 


1937 








Total 


.1 13,500,000 













To meet the interest and principal on these bonds ample sinking 
funds have been provided, and the bonds are now held on the market, 
notwithstanding the present depression, at prices well above those for 
which they were originally sold. 



FRIARS' LANDS. 



The question of the disposition of the friars' lands is one which is 
occupying the close attention of the Secretary of the Interior and the 
Director of Lands. The price of the lands was about $7,000,000. 



65 

Much delay has been encountered in making the necessary surveys 
and the disposition of them for the present has largely been tempo- 
rary and at small rents in order to secure an attornment of all the 
tenants and the clear definition of the limits of the leaseholds claimed 
by them. This has involved considerable time and expense in making 
the necessary surveys. The injury to the sugar industry and the de- 
struction of draft cattle has affected the price and character of the 
sugar lands, and they have been allowed to grow up in cogon grass. 
This will require the investment of considerable capital to put them 
in sugar producing condition. It is estimated that the salable lands 
would amount in value to something over $5,000,000 and that the 
lands, mostly sugar, which are not now salable, and the plants which 
were bought with the lands, represent the other $2,000,000 of the pur- 
chase price. It will take some years to work out the cost and it is 
possible, as already prophesied, that there will be a considerable loss 
to the islands, but as the purchase was based on political grounds and 
for the purpose of bringing on tranquillity, such a loss as that which 
was thought not improbable at the time of the purchase is amply com- 
pensated for in the general result. 

FINAL SETTLEMENT IN RESPECT TO CHARITABLE TRUSTS AND SPANISH- 
FILIPINO BANK WITH ROMAN CATHOLIC CHURCH. 

I have spoken in previous reports of the controversies arising be- 
tween the Roman Catholic Church and the Philippine government in 
reference to the administration of certain charitable trusts. The 
same church was interested as a majority stockholder in the Spanish- 
Filipino Bank and a dispute had arisen as to the right of the bank to 
exercise the power conferred on it by its original charter of issuing 
bank notes in an amount equal to three times its capital stock. A 
compromise was finally arranged last June with Archbishop Hartj? 
of Manila and was consummated during my visit to the Philippines. 
I submitted to you a full report of this compromise. It received 
your approval and was then carried into effect by the Philippine 
Commission. I append to this my special report to you of that com- 
promise, marked "Appendix A." 

ROADS. 

The construction of roads by the central government has gone on 
each year, but the roads have not been kept up by the municipal gov- 
ernments charged with the duty as they ought to have been. The 
Commission has now established a sj^stem by which it is hoped ulti- 
mately that the whole matter of roads may receive a systematic im- 
petus throughout the islands. Roads can not be kept up in the 



66 

Tropics except b} 7 what is known as the "caminero" system, in which 
a small piece of each road shall be assigned to the repair and control 
of a road repairer to be known as the " caminero." The truth is that 
good roads will develop as the people develop, because the people 
can keep up the roads if they will, and it is not until they have a large 
sense of political responsibility that they are likely to sacrifice much 
to maintain them. 

RAILROADS IN THE PHILIPPINES. 

In my last annual report, I set forth in detail the concessions 
granted for the construction of railroads in Luzon, Panay, Cebu, and 
Negros, and showed that within five years we might expect that, in- 
stead of a single line of railway 120 miles in length which was all 
that we found when we occupied the islands, we would have a system 
with a mileage of 1,000 miles. Work has gone on in full compliance 
with the terms of the concessions of the two companies. 

Only one of these companies took advantage of the provision for 
the guaranty of bonds, and they have built about 40 miles of road 
and have earned, under the terms of the concession, the guaranty of 
S973.000 of bonds, which has already been signed and delivered by the 
Philippine government. Of course, in this financial panic these com- 
panies are likely to have difficulty in securing investors in their securi- 
ties. The roads as constructed have been well constructed, and are 
admirably adapted to resist the climatic conditions in the islands. 
There is no reason in my judgment why these roads when 
constructed should not pay a reasonable percentage upon the invest- 
ment. It is of the utmost difficulty to secure the coming of capital to 
the islands, and it would greatly aid us if the dividends earned by 
these roads were very large. In the Orient two-thirds of the income 
of railways comes from passenger earnings, and one-third from 
freight. Of course, the railroads are very essential to the agricultural 
interests of the country and will directly affect the amount of exports 
of agricultural products — so we may count on a steady increase in the 
freight receipts from the moment of their beginning operation. As 
I say, however, the chief hope for profit in the railways is in the 
passenger traffic. In the three Visayas in which the railroads are to 
be constructed, the density of population is about 160 per square mile, 
whereas the average population per square mile in the United States 
in 1900 was but 26. The Island of Cebu has a population of 336 per 
square mile, or a greater density than Japan, France, Germany, or 
British India. It is, therefore, reasonable to suppose that the pas- 
senger earnings on these railroads will be very large. It was antici- 
pated that the labor problem would be a difficult one to solve in the 
construction of these roads. This has not proved to be true. The 



67 

Philippine labor has shown itself capable of instruction, and by 
proper treatment of being made constant in its application. Of 
course, the prices of labor have largely increased, but the companies 
constructing the roads have found it wise to increase wages, and 
thereby secure greater efficiency. Even with increased wages the 
cost of unit of result is less in the Philippines in the construction of 
railways than it is in the United States. Of course, the drain on the 
labor supply of sugar plantations and other places where agricultural 
labor is employed, is great and the effect upon raising sugar and 
other products is to increase the cost. But I think the lesson from the 
construction of the railroads is that Philippine labor can be improved 
by instruction and can be made effective and reasonably economical 
by proper treatment. The coming into the islands of the capital to 
construct railways, of course, has had a good effect in the improve- 
ment of business conditions, but it is to be noted that in the estimate 
of importations the railroad material and supplies which are brought 
in free under the statute are not included in the totals, and there- 
fore are not to be offered as an explanation for the very good showing 
in respect to the amount of imports to the islands for the last fiscal 
year. 

GENERAL BUSINESS CONDITIONS. 

Of course, the depression in certain business branches of agricul- 
ture, like sugar, tobacco and rice, due to lack .of markets for the first 
two, and to a lack of draft animals in the production of sugar and 
rice has had a direct effect upon the business of the islands of a de- 
pressing character. Gradually, however, business has grown better. 
In spite of adverse conditions the importations of rice have decreased 
from $12,000,000 gold to $3,500,000 gold, and, while the imports as 
a whole have increased not to their highest previous figure, they have 
been maintained within four and a half millions of their highest 
mark, and, as already said, the exports are higher than ever in the 
history of the islands, the balance of trade in their favor for the last 
fiscal year being about five millions, exclusive of gold and silver and 
government and railway free entries. 

I found in the islands a disposition on the part of both American 
and Philippine business men and of the leaders of all parties in the 
Philippine Assembly to make a united effort to improve business and 
general conditions. 

BUSINESS FUTURE OF PHILIPPINES. 

I do not hestitate to prophesy that during the next twenty-five years 
a development will take place in the agriculture and other business of 
the Philippine Islands, which* will be as remarkable in its benefits to 



68 

the United States and the Philippine Islands as was the development 
of Alaska during the last ten or fifteen years. Hope of this is not 
what has actuated the government in pursuing the policy that it has 
pursued in the development of the islands, but this is as inevitable a 
result as if it had been directly sought, and perhaps the absence of 
selfishness in the development of the islands is a greater assurance of 
profitable return than if business exploitation by the United States 
had been the chief and sole motive. The growth in the production of 
hemp and other fiber products, in cocoanuts, in rubber and many other 
tropical crops and in peculiar manufactures of the islands may be 
looked forward to with certainty. 

GOLD STANDARD CURRENCY. 

One of the great benefits conferred upon the islands by the Ameri- 
can Government has been the introduction of the gold standard. This 
has doubtless prevented the larger profits which were made in the old 
days by the purchasers of hemp and other agricultural products in the 
islands, who sold again in European and American markets, because 
under the S3^stem then prevailing, they bought in silver and sold 
in gold, and by watching the markets they were able to add very much 
to the legitimate profit of the middlemen by what constituted a system 
of gambling in exchanges. The same features characterized the 
banking in the islands. Xow. however, with the gold standard the 
gambling feature in business is very largely eliminated. The coinage 
is satisfactory to the people, the silver certificates circulate well and 
are popular, and there seems to be no ground for complaint of the 
currency. 

• NEED OF CAPITAL— AGRICULTURAL BANK. 

One of the crying needs of the Philippines is capital, and this 
whether it be for the development of railroads, wagon roads, manu- 
factures, or in the promotion of agriculture. The usurious interest 
which has to be paid b}- the farmers is so high as to leave very little 
for his profit and maintenance and ever since we entered the islands 
the cry for an agricultural bank which would lend money for a 
reasonable interest, say. 10 per cent, has been urged upon the Com- 
mission. Last year Congress authorized the government to guar- 
antee the interest at 4 per cent on a certain amount of capital in- 
vested in such a bank, but up to this time no one has embraced the 
opportunit}'- thus offered to undertake the conduct and operation of 
a bank although negotiations are pending looking to such a result. 
It is now proposed that the government shall undertake this instead 
of a private individual. Experimentation has been attempted on the 



69 

friars' lands by the appropriation of $100,000 for loans to the friar 
tenants to encourage them to improve agriculture, and the result 
of this experiment will be awaited with great interest. 

The reduction of the amount of silver in the silver peso for the pur- 
pose of keeping it within the 50-cent gold value, which is the legal 
standard, has gone steadily on and will result ultimately in the accu- 
mulation in the treasury of a fund of $3,000,000 gold. It is thought 
that part of this money might be taken to establish an agricul- 
tural bank on a governmental basis. The treasurer of the islands, 
Mr. Branagan, who has had large experience in banking in the 
islands, because his office has brought him closely into contact with 
it and because he has had to examine all the banks, is confident 
that an agricultural bank of one or two millions of dollars might be 
established by the government and managed by the treasury de- 
partment, together with the provincial treasurers in such a way as 
greatly to aid the cause of agriculture in the islands. One great dif- 
ficulty in the operation of an agricultural bank is the uncertainty that 
prevails to-day in the islands in respect to the titles of the lands 
which are held. The land law provided a method of perfecting titles 
through what is called the land court founded on the Torrens land 
system, which was introduced by law some years ago in the islands. 
The expense _of surveying the lands, due to the shortness of supply 
of surveyors, and the time taken has made the process of settling titles 
rather slow, but as defects have appeared the Commission has changed 
them and it is hoped that this system of preparing for the business 
of an agricultural bank may go on apace. 

POSTAL SAVINGS BANK. 

A postal savings bank has been established and was first more pat- 
ronized by Americans than Filipinos, but Filipinos are now taking 
it up and the deposits therein amount to upward of 1,000,000 pesos. 
There have been practically no banking facilities throughout the 
islands, except in Manila, Iloilo, and Cebu, and this establishment of 
postal savings-bank offices in a large proportion of the post-offices 
throughout the islands offers an opportunity to the people of moder- 
ate means to put their money in a secure place and to derive a small 
revenue therefrom. The insecurity of savings by Filipino farmers 
and others in the country has certainly reduced the motive for saving 
which an opportunity to deposit their money will stimulate. The 
exchange business of the islands has also been facilitated by statutory 
provisions authorizing the sale of exchange by provincial treasurers 
on the central treasury at Manila and vice versa. 
22380—08 6 



70 



POST-OFFICE AND TELEGRAPHS. 

The post-office department, considering the conditions that exist 
and the difficulties of reaching remote parts of the island, has been 
very well managed and the offices are increasing in encouraging 
proportion each year. 

The following table shows the increase in postal facilities from 
year to year of our occupation : 



For fiscal year ending June 30. 



Number 


Money or- 


Number 


post-offices. 


der offices. 


employees. 


19 




113 


24 


24 


130 


90 31 


331 


209 ! 33 


570 


291 63 


579 


414 62 


612 


476 i 60 


1,003 


505 


63 


1,091 



Stamp 
sales. 



1900 

1901 

1902 

1903 

1904 

1905 

1906 

1907 



P228, 178. 36 
233, 182. 96 
238, 418. 10 
248,414.36 
224, 354. 61 
222, 701. 36 
425, 261. 50 
607, 203. 44 



Under a system devised by Mr. Forbes, secretary of commerce and 
police, mail subsidies were granted to commercial lines on condition 
that good service at reasonable rates of transportation should be fur- 
nished upon safe and commodious steamers. The Government vessels 
which had previously been purchased in order to promote intercourse 
between the islands are now used on outlying routes where commercial 
lines will not take up the traffic, but are used in connection with the 
commercial lines, and in this way additional routes are being tested 
and the marine commerce between all the islands is made to increase. 

By consent of the Secretary of War, and on the recommendation 
of the commanding general of the Philippines and the agreement 
of the civil government, all the telegraph lines in the islands have 
now been transferred to the post-office department of the civil gov- 
ernment of the Philippines. These telegraph lines reach into the 
remotest provinces and to all the principal islands of the large archi- 
pelago. While there were some telegraph lines in the Spanish times, 
the system has grown to such proportions now as to be almost an 
entirely new system. It has made the government of the islands 
much more easy because it brings every province within half a day's 
communication of Manila for information and instructions from 
the central authority. It has furnished a most profitable instru- 
ment for business communication, and while it entails considerable 
burden on the civil government, it is well worth for governmental 
and business purposes all that it costs. I ought to say that the post- 
office department is rapidly training Filipinos to fill all the positions 
of telegraph operators, and that this materially reduces the cost of 
operation and at the same time furnishes an admirable technical 
school for great numbers of bright Filipino young men. I submit a 
statement of the mileage of the cables and telegraph lines operated by 
the Government. 



71 

1906. 

Miles. Miles. 
Lines transferred to the insular government by the Signal, Corps 
up to June 30: 

Telegraph lines 3, 780 

Cable lines 328 

Telephone lines 2, 137 

Total 6, 245 

Lines operated by the Signal Corps on June 30: 

Telegraph lines 1, 406 

Cable lines 1, 452 

Telephone lines 338 

Total 3,190 

Total mileage of telegraph, cable, and telephone lines in operation 

June 30 1 — 9, 441 

Number of telegraph offices *161 

Number of telephones in operation ._ 450 

1907. 

Lines transferred to the insular government by the Signal Corps since 

July 1, 1907 1,914.5 

Total mileage of telegraph and cable lines in operation by the insular 

government to date 6,951 

MINES AND MINING. 

There has been a good deal of prospecting in the islands and gold 
and copper have been found in paying quantities in the mountains 
of northern Luzon, the provinces of Benguet and Bontoc and Le- 
panto, as well as in the Camarines in southeastern Luzon, and in 
Masbate, an island lying directly south of Luzon ; but great complaint 
is made, and properly made, of the limitations upon the mining law 
which prevent the location by one person of more than one claim on 
a lode or vein. Mining is such a speculative matter at any rate, and 
the capital that one puts into it is so generally lost that it would 
seem that, in a country like the Philippines where development 
ought to be had, there should be liberal inducements for the invest- 
ment of capital for such a purpose. Secretary Worcester of the inte- 
rior department has frequently recommended that this limitation of 
the law be repealed. The Commission joins in this recommendation 
and I cordially concur. 

While I do not favor large land holdings, I also concur in the 
recommendation of the secretary of the interior and the Commission 
that the prohibition upon corporations holding more than 2,500 acres 
of land be also stricken out. It certainly might well be increased to 
10,000 acres if any limitation is to be imposed at all. 

U. S. COASTWISE TRADING LAWS. 

It is proposed by some to put in force the coastwise trading laws in 
respect to the navigation between the United States and the islands. I 



72 

think this a very short-sighted policy. To-day the trade between the 
United States and the islands, export and import, is about 17 per cent 
of the total. The proportion of the total export trade from the Phil- 
ippines to the United States is growing and is certain to grow more 
rapidly in the future, especially if proper legislation is adopted in 
respect to sugar and tobacco. Now a coastwise trading law will ex- 
clude altogether the use of foreign bottoms between the ports of the 
United States and the ports of the Philippine Islands, and will con- 
fine that commerce to United States vessels. There is very grave 
doubt whether there are enough United States vessels to carry on this 
trade as it is, and even if there were they could not carry on the trade 
without a very great increase in freight rates over what they now are. 
The minute that these rates are advanced, while the rates to other 
countries remain the same, the trade between the islands and the 
United States will cease to be. There will be no trade for the vessels 
of the United States to carry, no one will have been benefited in 
the United States, and the only person who will reap advantage is the 
foreign exporter to whom the Philippine business house will naturally 
turn for exchange of products. The only method possible by which 
the United States vessels can be given the Philippine trade is by 
voting a reasonable subsidy for United States vessels engaged in that 
trade. Any other prohibitive or exclusive provision of law will be 
merety cutting off the nose to spite the face of the interest which 
attempts it. I feel certain that when the question of applying the 
coastwise trading laws to the business between the United States and 
the islands is fully investigated, even those representing the shipping 
interests that need and ought to have much encouragement will con- 
clude that the coastwise trading laws applied to the American Philip- 
pine trade would merely destro}^ the trade without benefiting the 
shipping interests. 

In the criticisms upon the Government's Philippine policy to be 
found in the columns of the newspapers that favor immediate sepa- 
ration, it has been frequently said that the coastwise trading laws 
of the United States apply as between islands of the Philippines. 
The truth is that the restrictions upon shipping between ports in the 
Philippine Islands are what the Legislature of the islands imposes, 
and Congress has made no provision of limitation in respect to them. 
The coastwise regulations in force within the Archipelago are as lib- 
eral as possible. 

CITY OF MANILA. 

The city of Manila is the social, political, and business center of the 
islands. It is the only large city in the islands. Its population is 
about 250,000, while there is no other city that exceeds 40,000 in 



73 

population. By what now has been proven to be a mistake, the Com- 
mission purchased a building which was known and used as the 
Oriente Hotel. It was a hotel not very well conducted, but it was the 
only important hotel in the city of sufficient size and dignity to induce 
the coming of tourists. It was hoped that the purchase of this build- 
ing, which was not particularly adapted as a hotel, might lead to the 
construction and maintenance of a better hotel. Such has not been 
the result, and although there are hotels in the city of Manila, its 
reputation is that of being unable to furnish to the traveling public a 
comfortable hostelry for a short stay. This has driven away many 
travelers of our own country and other countries from a city that in 
historical interest, in beauty, and in comfort of life will compare 
favorably with any. 

Mr. Burnham, the well-known landscape architect of Chicago, 
some years ago, without compensation, visited the Philippines and 
mapped out a plan for the improvement of the city, and laid out a 
plan of construction for Baguio in Benguet as the summer capital. 
To both of these plans, all improvements which have been attempted 
in the city have conformed, and if the present efficient city govern- 
ment continues, there is every reason to believe that Manila will be- 
come a most attractive city. A contract has been made for the leas- 
ing of ground immediately upon the Luneta and facing the bay to a 
firm of capitalists for the construction of a hotel to cost 500,000 pesos. 
It is doubtful, however, whether this capital can be raised at the 
present time, and if it falls through it is proposed, and I think with 
wisdom proposed, that the government shall erect a hotel as a public 
investment for the development of the city and the islands, and lease 
it to the best bidder. 

There, is no city in the world better governed than Manila. The 
streets are well cleaned, are well policed, there is a most excellent fire 
department, the parks are being enlarged and improved, the street 
car system is as good as any anywhere, and with the improvements in 
the water supply the sewerage system and esteros or canals, which 
are now under foot and part of which are quite near accomplished, 
the face which the Filipinos turn toward the world in the city of 
Manila will be a most pleasing one. 

POLITICAL FUTURE OF THE ISLANDS. 

There are in the Philippines many who wish that the government 
shall declare a definite policy in respect to the islands so that they 
may know what that policy is. I do not see how any more definite 
policy can be deolared than was declared by President McKinley in 
his instructions to Secretary Koot for the guidance of the Philippine 



74 

Commission, which was incorporated into law by the organic act of 
the Philippine government, adopted July 1, 1902. That policy is de- 
clared to be the extension of self-government to the Philippine 
Islands by gradual steps from time to time as the people of the 
islands shall show themselves fit to receive the additional responsi- 
bility, and that policy has been consistently adhered to in the last 
seven years now succeeding the establishment of civil government. 

Having taken some part and sharing in the responsibility for that 
government, of course my views of the results are likely to be colored 
by my interest in having tne policy regarded as successful, but elim- 
inating as far as is possible the personal bias, I beiieve it to be true 
that the conditions in the islands to-day vindicate and justify that 
policy. It necessarily involves in its ultimate conclusion as the steps 
toward self-government become greater and greater the ultimate inde- 
pendence of the islands, although of course if both the United States 
and the islands were to conclude after complete self-government were 
possible that it would be mutually beneficial to continue a govern- 
mental relation between them like that between England and Aus- 
tralia, there would be nothing inconsistent with the present policy in 
such a result. 

Any attempt to fix the time in which complete self-government may 
be conferred upon the Filipinos in their own interest, is I think most 
unwise. The key of the whole policy outlined by President McKinley 
and adopted by Congress was that of the education of the masses of 
the people and the leading them out of the dense ignorance in which 
they are now, with a view to enabling them intelligently to exercise 
the force of public opinion without which a popular self-government 
is impossible. 

It seems to me reasonable to say that such a condition can not be 
reached until at least one generation shall have been subjected to 
the process of primary and industrial education, and that when it is 
considered that the people are divided into groups speaking from ten 
to fifteen different dialects, and that they must acquire a common 
medium of communication, and that one of the civilized languages, 
it is not unreasonable to extend the necessary period beyond a genera- 
tion. By that time English will be the language of the islands and we 
can be reasonably certain that a great majority of those living there 
will not onty speak and read and write English, but will be affected by 
the knowledge of free institutions, and will be able to understand their 
rights as members of the community and to seek to enforce them 
against the pernicious system of caciquism and local bossism, which I 
have attempted in this report to describe. 

But 'it is said that a great majority of the people desire immediate 
independence. I am not prepared to say that if the real wish of the 
majority of all the people, men, women, and children, educated and 



75 

uneducated, were to be obtained, there would not be a very large 
majority in favor of immediate independence. It would not, how- 
ever, be an intelligent judgment based on a knowledge of what in- 
dependence means, of what its responsibilities are or of what popular 
government in its essence is. But the mere fact that a majority of all 
the people are in favor of immediate independence is not a reason 
why that should be granted, if we assume at all the correctness of 
the statement, which impartial observers can not but fail to acquiesce 
in, to wit : that the Filipinos are not now fit for self-government. 

The policy of the United States is not to establish an oligarchy, 
but a popular self-government in the Philippines. The electorate to 
which it has been thought wise to extend partial self-government em- 
braces only about 15 or 20 per cent of the adult male population, be- 
cause it has been generally conceded by Filipinos and Americans 
alike that those not included within the electorate are wholly unable 
to exercise political responsibility. Now, those persons who de- 
manded and were given a hearing before the delegation of Congress- 
men and Senators that visited the islands in 1905, to urge immediate 
independence contended that the islands are fit for self-government 
because there are from 7 to 10 per cent of intelligent people who are 
constituted by nature a ruling class, while there are 90 per cent that 
are a servile and obedient class, and that the presence of the two 
classes together argues a well balanced government. Such a proposi- 
tion thus avowed reveals what is known otherwise to be the fact that 
many of those most emphatic and urgent in seeking independence in 
the islands have no thought of a popular government at all. They 
are in favor of a close government in which they, the leaders of a 
particular class, shall exercise control of the rest of the people. Their 
views are thus wholly at variance with the polic}^ of the United States 
in the islands. 

The presence of the Americans in the islands is essential to the due 
development of the lower classes and the preservation of their rights. 
If the American government can only remain in the islands long 
enough to educate the entire people, to give them a language which 
enables them to come into contact with modern civilization, and to ex- 
tend to them from time to time additional political rights so that by 
the exercise of them they shall learn the use and responsibilities 
necessary to their proper exercise, independence can be granted with 
entire safety to the people. I have an abiding conviction that the 
Filipino people are capable of being taught self-government in the 
process of their development, that in carrying out this policy they 
will be improved physically and mentally, and that, as they acquire 
more rights, their power to exercise moral restraints upon themselves 
will be strengthened and improved. Meantime they will be able to 
see, and the American public will come to see the enormous material 



76 

benefit to both arising from the maintenance of some sort of a bond 
between the two countries which shall preserve their mutually bene- 
ficial business relations. 

No one can have studied the East without having been made aware 
that in the development of China, Japan and all Asia, are to be pre- 
sented the most important political questions for the next century, 
and that in the pursuit of trade between the Occident and the Orient 
the having such an outpost as the Philippines, making the United 
States an Asiatic power for the time, will be of immense benefit to 
its merchants and its trade. While I have always refrained from 
making this the chief reason for the retention of the Philippines, be- 
cause the real reason lies in the obligation of the United States to 
make this people fit for self-government and then to turn the govern- 
ment over to. them, I don't think it improper, in order to secure 
support for the policy, to state such additional reason. The severe 
criticism to which the policy of the Government in the Philippines 
has been subjected by English Colonial statesmen and students, should 
not hinder our pursuit of it in the slightest. It is of course opposed 
to the policy usually pursued in the English government in dealing 
with native races, because in common with other colonial powers, 
most of England's colonial statesmen have assumed that the safest 
course was to keep the native peoples ignorant and quiet, and that any 
education which might furnish a motive for agitation was an inter- 
ference with the true and proper course of government. Our policy 
is an experiment, it is true, and it assumes the risk of agitation and 
sedition which may arise from the overeducation of ambitious poli- 
ticians or misdirected patriots, in order that the whole body of the 
people may acquire sufficient intelligence ultimately to exercise gov- 
ernmental control themselves. 

Thus far the policy of the Philippines has worked. It has been 
attacked on the ground that we have gone too fast, that we have given 
the natives too much power. The meeting of the assembly and the 
conservative tone of that body thus far disclosed, makes for our view 
rather than that of our opponents, but had the result been entirely 
different with the assembly, and had there been a violent outbreak at 
first in its deliberations and attempts at obstruction, I should not 
have been in the least discouraged, because ultimately I should have 
had confidence that the assembly would learn how foolish such exhibi- 
tions were and how little good they accomplished for the members 
of the assembly or the people whom they represented. The fact that 
this natural tendency was restrained is an indication of the general 
conservatism of the Filipino people. 

Though bearing the name of immediate independistas, the mem- 
bers of the controlling party of the assembly are far from being in 
favor of a policy which those words strictly construed would mean. 



77 

Moreover, the recent election held, since the Assembly was organized, 
in which fifteen progresista and fifteen nationalista governors were 
elected, is an indication that the nationalist feeling is by no means 
so overwhelming as was at first reported when the returns from the 
election of the assembly were published in the press. 

The fact that Filipinos are given an oportunity now to take part 
in the forming of the governmental policies in the islands, will I 
hope satisfy many of them that the United States is in earnest in 
attempting to educate them to self-government, will so occupy their 
ambitions and minds as to make the contention for immediate in- 
dependence more of an ideal than of a real issue, will make more 
permanent and lasting the present satisfactory conditions as to peace 
and tranquillity in the islands, and will turn their attention toward 
the development of the prosperity of the islands by improvement of 
its material conditions and the uplifting of the people by their educa- 
tion, sanitation and general instruction in their political, social and 
material responsibilities. 

There has been in the United States in the last year a recurring 
disposition on the part of many of the press and many public men to 
speak of the Philippine policy as if foredoomed to failure, and the 
condition of the islands as a most deplorable one. No one who knew 
the islands in 1900, and who has visited them during the present year 
and especially during the meeting of the assembly can honestly and 
fairly share such views. To one actually responsible in any degree 
for the present conditions by reason of taking part in the government 
of those islands, the changes made and the progress made under the 
circumstances are most gratifying. 

COST OF THE PRESENT GOVERNMENT OF THE ISLANDS. 

The most astounding and unfair statements have appeared in the 
press from time to time and have been uttered by men of political 
prominence who should know better, in respect to the cost to the 
United States of the Philippine Islands. The question of the cost of 
the islands to the United States as affecting its future policy can not 
of course include the cost of a war into which the United States was 
forced against its will, and which whether it ought to have been car- 
ried on or not, was carried on and was finished more than five years 
ago. The only question of cost that is relevant to the present dis- 
cussion is. the cost to the United States of the maintenance of the 
present Philippine government, including in that the cost of the 
maintenance of that part of the army of the United States which is 
in the Philippine Islands. Nor is it fair to include the entire cost of 
the army of the United States in the Philippine Islands for the rea- 
son that even if we did not have the Philippines, we should certainly 



78 

retain the present size of our standing army which hardly exceeds 
60.000 effective men, a very small army for 80.000.000 people. More- 
over, it is worthy of note that the greatest increase in the Army of 
recent years has been in that branch of the service — to wit, the coast 
artillery — which has not been used in the Philippines for some years. 

The only additional cost therefore that the maintenance of the 
army can be said to entail upon the United States is the additional 
cost of maintaining 12,000 soldiers in the islands over what it would 
be to maintain the same number of soldiers in the United States. 
This has been figured out and roughly stated amounts to about $250 
a man or $3,000,000, together with the maintenance of 4,000 Philip- 
pine Scouts at a cost of $500 a man, or in all $2,000,000, which makes 
a total annual expenditure of $5,000,000. The United States at 
present contributes something, perhaps $200,000, to the expense of the 
coast survey of the islands. With this exception, there is not one cent 
expended from the treasury of the United States for the maintenance 
of the government in the islands. The additional cost of the 12,000 
men in the islands, figured above at $250 a man, includes the cost of 
transportation and the additional cost of food supplies and other 
matters. 

There is an item of cost, which perhaps may be charged to the Phil- 
ippine Islands. I refer to the expense of fortifying the bay of Manila, 
the port of Iloilo and the port of Cebu, so that in holding the islands 
the United States shall not be subject to sudden and capricious attack 
by any ambitious power. This may reach a total of ten millions. But 
it is hardly fair to charge this to the Philippine policy; for almost 
everyone concedes the necessity of maintaining and fortifying coal- 
ing stations in the Orient whether we have the Philippines or not. 

The question is, therefore, whether, in order to avoid the expendi- 
ture of $5,000,000 a year, the United States should pursue the humili- 
ating policy of scuttle, should run away from an obligation which it 
has assumed to make the Philippines a permanently self-governing 
community, and should miss an opportunity at the same time of build- 
ing up a profitable trade and securing a position in the Orient that 
can not but be of the utmost advantage in obtaining and maintaining 
its proper proportion of Asiatic and Pacific trade. 

From time to time there has been quite severe criticism of the 
present Philippine government on the ground that it is such an ex- 
pensive government as to be burdensome to the people. The facts 
are that the taxes which fall upon the common people are much less 
than they ever were under the Spanish regime. The taxes which 
fall upon the wealthy are considerably more, because as a matter of 
fact the Spanish system of taxation was largely devised for the pur- 
pose of avoiding taxation of the wealth of the islands. I have not at 
hand and am not able to insert in this report the figures and statistics 



79 

which demonstrate this fact. They are now being prepared in 
Manila, and I hope at some future date to submit them for your con- 
sideration. Not only is the comparison to be instituted with the con- 
ditions existing under the Spanish regime, but also with the taxa- 
tion of other dependencies. The data with respect to these are difficult 
to get and frequently liable greatly to mislead when the conditions of 
each particular colony are not fully understood and stated. But my 
information is derived from Governor Smith and Mr. Forbes that the 
cost per capita of the government of the Philippines will compare 
most favorably with that of colonial governments presenting sub- 
stantially similar conditions. 

The reports from the governor-general, the heads of departments 
and of bureaus have not reached Washington. I was able before I 
left the islands to read informal drafts of some of them and much 
of the information as to the last year's operations I have derived 
from them. I shall submit the reports immediately upon their arrival. 

RECOMMENDATIONS. 

I therefore recommend: 

First. That legislation be adopted by Congress admitting the prod- 
ucts of the Philippine Islands to the markets of the United States, 
with such reasonable limitations as may remove fear of interference 
with the tobacco and sugar interests in the United States; 

Second. That the present restrictions be removed as to the acquisi- 
tion of mining claims and the holding of lands by corporations in 
the Philippines ; 

Third. That further legislation be passed authorizing the Philip- 
pine government, if it chooses, to open and conduct an agricultural 
bank, with a capital not exceeding $2,000,000; and 

Fourth. That the coastwise laws of the United States be made per- 
manently inapplicable to the trade between the ports of the islands 
and the ports of the United States. 

Sincerely, yours, Wm. H. Taft. 

The President. 



APPENDIX "A" 



NEGOTIATIONS 



FOR THE 



SETTLEMENT OF TITLE TO CERTAIN LANDS 
IN THE PHILIPPINE ISLANDS 



CLAIMED BY THE PHILIPPINE GOVERNMENT AND BY 
THE ROMAN CATHOLIC CHURCH 



AND IN THE MATTER OF 



THE CHARTER OF THE SPANISH-FILIPINO BANK 



(81) 



LETTER OF SECRETARY OF WAR TO THE PRESIDENT. 



War Department, 

Washington, July 2, 1907. 

My Dear Mr. President : I beg to submit herewith a report upon 
negotiations which have reached a tentative conclusion between Arch- 
bishop Harty, of Manila, and myself, with reference to the settle- 
ment of certain controversies between the Philippine government on 
the one hand and the Catholic Church on the other. With the 
Catholic Church may be included the Banco Espanol-Filipino, of 
which I am informed that the Archbishop of Manila, in his trust 
capacity for the Roman Catholic Church, is the chief stockholder. 
The negotiations concern the administration of trust properties of an 
educational and charitable character, and also the charter of the 
Filipino-Spanish Bank, especially in respect of a franchise which it 
was given by the Spanish Government for the issuing of circulating 
notes. 

At the time that I was sent to Rome, by your direction. Secretary 
Root, in his instructions to me of May 9, 1902, said : 

The rights and obligations remaining under the various specific trusts for 
education and charity which are now in doubt and controversy ought to be 
settled by agreement if possible, rather than by the slow and frequently disas- 
trous processes of litigation, so that the beneficent purposes of these foundations 
may not fail. 

And in my letter of July 3, 1902, in response to a communication of 
Cardinal Rampolla, I said : 

It is hoped that when the apostolic delegate competent to act for the Holy See 
visits the islands he may take up with the Philippine government the educa- 
tional and charitable trusts now in dispute, and that they may agree by 
compromise on those which should be conducted under the direction of the 
civil government and those which should be conducted under the direction of 
the church ; but should it be impossible to agree upon such a compromise, then 
it is proposed to submit all the disputed questions of this character to the 
tribunal of arbitration constituted under the first head, which shall hear the 
causes as in a court and make the award as above provided, and that among 
the questions to be submitted to such tribunal shall be the one arising upon the 
San Jose foundation now pending in the supreme court of the islands. 

I am very glad to say that I believe a satisfactory compromise has 
been reached. 

After the cession of sovereignty to the United States under the 
Treaty of Paris took effect the question arose as to whether the gov- 
ernment or the church should act as administrator and trustee of the 
f ollowing trusts : 

The College of San Jose. — This is now under the control of the 
Dominican order and is made a part of the University of St. Thomas. 
Its foundation includes certain buildings in Manila and an agricul- 
tural estate, all of which are valued at about $500,000. 

(83) 



84 

The Hospicio San Jose. — This is now used as a lunatic asylum and 
also as a pauper school. It is in charge of a board of directors under 
the Archbishop of Manila. Its foundation is estimated to be worth 
about $400,000. 

The Hospital of San Juan de Bios. — This is administered by a 
directorate under the supervision of the Archbishop of Manila, and 
the value of its foundation, including its buildings and a large 
hacienda, is estimated at $1,000,000. 

The Hospital of Cavite. — This is a small hospital in possession of 
the archbishop of Manila and worth not more than $50,000. 

The Hospital of San Lazaro. — This was conducted, until the United 
States forces took charge of Manila, by the Franciscan monks as a 
leper hospital. The Franciscan monks surrendered it to the admin- 
istration of the military government, and it has ever since been in 
charge of the military government, or of the Philippine civil govern- 
ment, which succeeded. Its property is chiefly, in addition to a large 
hospital building, urban or suburban property, which has become 
quite valuable and is estimated now as worth from $1,250,000 to 
$2,000,000. 

First. In respect to the College of San Jose, the controversy early 
attracted attention under the military government because the Fili- 
pino College of Physicians, claiming that this was a civil trust, 
petitioned General Otis, the military governor, to prevent the continu- 
ance of this college and its foundation as a medical school and part of 
the Dominican University of St. Thomas. General Otis issued an 
order forbidding the use of the college buildings and property for 
this purpose, but did not take the property from the custody of the 
Dominicans or of the Catholic Church. The matter was agitated 
before the Commission as soon as the Commission reached the islands, 
and we finally, after hearing arguments on both sides, made special 
provision for a decision of the controversy by the Supreme Court. 
We did not intimate our view as to the merits of the controversy, but 
did hold that General Otis had no right to issue the order which he 
did issue, and we accordingly set it aside. As a matter of fact, after 
studying the case, two of the Commissioners — that is, General Wright 
and myself — reached the conclusion that the civil government had 
no right to take possession of the College of San Jose, or to administer 
it. while our three colleagues — Judge Ide and Commissioners Moses 
and Worcester — differed with us and thought suit should be brought 
by the civil government to maintain its right as trustee, and, as 
already said, a special act was passed for an original suit in the 
supreme court. The case has been argued and the decision has been 
prepared, but has not been handed down, because, at the request of the 
parties, it was hoped that it might be included in the general settle- 
ment. 

In respect to the Hospicio San Jose and the San Juan de Dios Hos- 
pital, in 1902 the attorney-general of the Philippine Islands, in 
opinions which I append, advised the civil governor that the right 
to administer these trusts was a civil one and was in the civil govern- 
ment. Such examination of these cases as I have been able to give 
indicates that these trusts were originally religious and pious trusts 
and pertained to the church, but the position of the attorney-general 
is that the King of Spain by subsequent decrees freed them of their 
religious character and took them over to his civil administration. 



85 

The claim of the church in all these cases is that under the Govern- 
ment of Spain all charitable and religious foundations were pre- 
sumptively pious works, ohras pias, and under the control of the 
church ; that there were two kinds — one under the immediate control 
of the ordinary or the bishop of the diocese and the other under the 
control of the King as the universal patron of religious trusts. It 
was claimed that under two bulls — one of Alexander VI and the 
other of Julius II — the Popes transferred much of their authority 
to be exercised by the King of Spain, and especially their power as 
patrons of religious trusts. Hence, it is contended by the church 
authorities that all these trusts which had originally a religious 
foundation pertained to the Koman Catholic Church down to the 
ending of the Spanish rule in the Philippine Islands, and that even 
where by royal decree a trust administered by a religious order was 
taken over by the King because of abuses in its management the 
religious character of the trust did not cease, but the action of the 
King, or of the governor-general acting for him, was that as a vice- 
royal patron really in the name and the authority of the Pope. At 
the time the Americans entered Manila these two trusts were being 
managed by directorates containing both ecclesiatics and civilians 
under appointment of the governor-general. On his retirement he 
invited, so it is claimed for the church, the archbishop to assume con- 
trol as religious patron representing the Pope on the withdrawal of 
the representative of the King of Spain, and the archbishop took 
control as such. 

The question is a most intricate and complicated one, and one upon 
^hich, although I have given it some study, I am by no means clear 
as to the result which would be reached at the end of a long litigation. 
In opposition to the opinions of the attorney-general upon the ques- 
tion of Hospicio San Jose and the San Juan de Dios Hospital, I 
append the petition of the Archbishop of Manila to you, which sets 
out the views of the church, authorities upon the right to administer 
these trusts. 

In respect to the Hospital of Cavite, I don't think the civil authori- 
ties insist upon their claim of administration. 

The trust of the Hospital of San Lazaro was being administered 
by the monks of St. Francis when the military government of the 
United States was established. The monks were unable to carry it 
on and turned it over to the United States military governor. This 
trust was undoubtedly of religious origin, though whether its subse- 
quent mutations gave it a civil character is a doubtful question. Our 
claim to administer is not thought to be so strong in this case as in 
those of Hospicio San Jose and San Juan de Dios. From the stand- 
point of public usefulness it is much better that the government 
should control this trust of San Lazaro than any of the others. 

The members of the Commission were long ago convinced of the 
wisdom of ending the litigation, which was likely to be continuous 
and exasperating, and agreed that if we could secure the administra- 
tion of the San Lazaro property as a leper hospital and for other 
diseases we would be entirely willing to allow the other trusts to be 
administered without question by the Roman Catholic Church. The 
reason why we were anxious to secure the San Lazaro property was, 
first, because it was admittedly the most valuable trust of all, and is 
nearly equal in value to the rest which are in dispute. A majority 

22380—08 7 



86 

of its property is city property, the value of which is rapidly in- 
creasing, and the rents from which can be made quite profitable. 
It was very badly mismanaged when in the hands of the Franciscans, 
who allowed themselves to be robbed by middlemen, who collected 
all the profits and paid nothing to them. But under government 
control it has been made a very wealthy charity. The foundations 
of the other charities are chiefly agricultural property, and while 
that is often valuable it is not so certain in its returns, and on the 
whole not so desirable, whatever its estimated value, as the city 
property like that of San Lazaro. There is an additional reason 
why we would desire to retain control of San Lazaro. It is admi- 
rably adapted to the construction of hospitals for epidemic diseases 
and for all the public buildings connected with the sanitary work 
of the government and the city, and something more than $100,000 
in gold has been expended by the Philippine government in improve- 
ments on the San Lazaro estate and near the old San Lazaro Hospital. 
It would be exceedingly inconvenient for the government, therefore, 
to give up the administration and control of that charity. Accord- 
ingly, in the discussion with Monsignor Agius, the apostolic delegate, 
I renewed a proposition, as Secretary of War, in 1905, which the 
Commission had made before my visit to the islands in that year, 
that if the church would consent to our holding and administering 
the San Lazaro estate, which was in our possession, we would com- 
promise by allowing the church to retain all the other trusts, includ- 
ing the College of San Jose, which was in litigation, and would con- 
sent to a decree directing that that be turned over to the control of 
the Archbishop of Manila for administration, in accordance with 
the original purposes of the founder. Monsignor Agius was not 
willing, because of the. great value of the San Lazaro property, to 
make this compromise. When it was proposed by the government 
to bring suit to recover the San Juan de Dios Hospital property, 
Archbishop Harty protested by cable to me, and thereupon I tele- 
graphed him a renewal of the offer of compromise which I had made 
to Monsignor Agius. He did not then accept it. He subsequently 
visited Eome and obtained permission to make a compromise with 
respect to these trusts, and then came to America for a conference 
with me. His proposition of compromise is contained in the peti- 
tion which I have filed herewith. After much discussion, in which 
he brought into requisition the services on his behalf of Mr. Festus J. 
Wade, a banker of wide experience of St. Louis, we agreed upon a 
tentative settlement, which is appended herewith. 

The 50 hectares which is reserved for the archbishop and the 
church out of the San Lazaro trust property in this compromise 
is valued, as we learned by cable, at about 5,000 pesos a hectare. It 
lies north of the valuable part of the estate and embraces swamps 
and unimproved land. All of it is not worth to exceed 250,000 
pesos, or $125,000. So that the part which we receive in the com- 
promise amounts certainly to $1,200,000, and probably to $1,500,000, 
and we save the money which we have already invested in San 
Lazaro and secure a most useful public sanitary plant. This ten- 
tative settlement was made subject to the approval of the Commission, 
and the Commission have since signified their acquiescence in the 
arrangement. 



87 

I need not emphasize to you, I am sure, the importance of the set- 
tlement of this controversy, even though the church had some advan- 
tage in the result. I do not think it has. My own judgment as a 
lawyer is that it is very doubtful whether we could have established 
our claim upon appeal to the Supreme Court to the administration 
of any of these trusts. They are so commingled in their origin with 
religious charities that I am quite confident that an American court 
would feel that a purely civil government was not competent to 
administer them according to the intent of their founders, and I am 
under the impression that a court would regard that as the chief 
guide to them in deciding what trustee should be entitled to administer 
the charity. It may be said that we have no right to divide up the 
San Lazaro charity — that it ought to go to one or the other party as 
a whole. I think this objection, however, can be met by the sugges- 
tion that we have already put a very large amount of money out of 
the treasury of the Philippines into that part of the San Lazaro 
estate which we retain, and that therefore we may properly part with 
the outlying remainder of the estate of comparatively little value 
for purposes of peace and to secure the administration of this particu- 
lar charity of so much benefit to the general public. 

There was united with the settlement, however, the settlement of 
a controversy with respect to the Banco Espanol-Filipino. I shall 
not state the question in detail, but may say in a summary way that the 
bank was established under general Spanish law and then was reor- 
ganized under special royal decree and was given the right to have a 
capital of 3,000,000 pesos, the equivalent of $1,500,000, with an 
exclusive privilege of issuing notes to the amount of 9,000,000 pesos, 
to constitute the circulating currency in the islands. When the 
United States took possession of the Islands, the bank had a capital 
only of 1,500,000 pesos, with a surplus of 900,000 pesos, and had 
issued notes to about the amount of 1,500,000 pesos. The Philippine 
Commission was not willing to permit the exercise by the bank of 
the franchise to issue notes beyond its capital stock, and therefore 
imposed a prohibitory tax on the issue of notes beyond its capital 
stock. This was seriously objected to by the bank, and I may say 
by the church authorities, because the archbishop of Manila, as I 
am informed, owns or controls more than one-half of the stock of 
the bank. It has been vigorously contended, in printed briefs and 
otherwise, that this charter of the Spanish Kingdom, bj virtue of the 
guaranties of the Treaty of Paris, passed unimpaired under American 
sovereignty, and that therefore the American Government, and the 
Philippine government as its agent, are bound to recognize the 
validity of the treaty and to allow the issue of notes to the extent 
of three times the capital stock of the bank. I have never been 
willing to concede that such a franchise as that of issuing currency 
could pass from one sovereignty to another without express pro- 
vision. It seems to me that it is of such a sovereign character as to 
lapse unless especially saved in the deed or treaty of cession so as to 
remain in force under the new sovereignty. However this may be, 
the authorities of the bank have threatened litigation by resistance 
to the tax and otherwise to test the question of their right to enjoy 
this note-issuing franchise to its full extent. I must repeat that this 
was an exclusive franchise which forbade the issue of notes by any 



88 

other bank and was so exclusive, according to the views of the bank 
authorities, as to make the issue of silver certificates by the Philippine 
government a violation of this exclusive franchise. Those of us who 
have been responsible for the Philippine government have not had 
the slightest objection to the issuing of notes under a proper bank 
charter which should give proper security for the redemption of the 
notes, and, therefore, when the matter was agitated in connection 
with the settlement of the trust controversies I expressed an entire 
willingness to consent to an amendment of the charter if that amend- 
ment should, in the judgment of the Commission and our financial 
experts, secure the payment of the notes to be issued. The compro- 
mise which we have agreed upon in this respect may be shortly stated 
as follows: 

The amendment takes away any exclusive right, on the part of the 
bank to issue circulating notes, but provides that no other bank shall 
exercise this privilege unless it has a capital of $1,000,000. It pro- 
vides that the present bank may increase its capital to 10,000,000 
pesos, provided the increase consists in the payment of money into 
capital in cash to the par value of the stock. It then permits the 
issuing of notes equal in value to the paid-up capital stock, not ex- 
ceeding, however, 9,000.000 pesos, the amount which might have been 
issued under the old charter on a capital of only 3,000,000 pesos. 

Under the Spanish charter the Government was allowed to select 
certain officers and to secure loans without interest, features which 
gave the bank the character of a government institution. All these 
features are renounced by the Philippine government, and only the 
right of rigid examination and investigation at all times by the 
treasurer and the governor-general, exactly similar to those methods 
provided by the national banking act, are reserved. The rules for 
the investment of the assets of the bank are rigidly drawn and 
amended with a view to the maintenance of all the capital in the 
form of bankable securities. The right to invest in real estate securi- 
ties is limited to 20 per centum of the capital. The land and build- 
ings taken as securities must be entirely free from encumbrance and 
worth double the value of the loan. A reserve of 25 per centum of 
cash to redeem the circulating notes is always required to be main- 
tained. A tax of one-half per cent on the circulating notes is imposed 
when those notes are issued against capital. There is a special pro- 
vision by which 600,000 pesos of circulating notes may be issued upon 
the deposit of acceptable securities with the treasurer of the islands 
to that amount. These 600,000 pesos are included within the allowed 
total of 9,000,000 pesos, but when notes are issued under this pro- 
vision they are to pay 1 per cent tax. 

The statutes of the bank we have carefully gone over, and into the 
consultation I have called not only General Edwards and Major 
Mclntyre, of the Insular Bureau, but also the treasurer of the islands, 
Mr. Frank Branagan, who is familiar with banking in the islands, 
Mr. Conant, the financial expert, and Mr. Kemmerer, a financial ex- 
pert who was engaged in the islands for over two years and who was 
bank examiner there, and Professor Jenks, of Cornell, who is very 
familiar with oriental banking, and they all approve the amendment 
to the charter and the arrangement under which now this issue of cir- 
culating notes is to take place. It is an instance of asset circulation, 



89 

and it is an increase of the security over notes, which might have been 
issued to the extent of 9,000,000 pesos, from 3,000,000 pesos capital, 
to 9,000,000 pesos capital. The amendment to the charter and the 
recognition of it as thus amended as valid is exceedingly popular 
among business circles in Manila, because it is thought it will offer 
an inducement for the coming in of banking capital which is so badly 
needed there. 

For these reasons I am entirely willing to recommend the amend- 
ment to the bank charter as in the interest of the public in Manila, 
as well as the basis for bringing about the compromise with respect 
to the trusts, which I have already described and which I am sure 
will greatly contribute to the peace and prosperity of the islands. 
I respectfully ask your authority to direct that the tentative agree- 
ment already made by me, together with the amendments of the bank 
statutes, which I have approved, be carried into effect by appropriate 
legislation and decrees in court. 

Very respectfully, Wm. H. Taft, 

Secretary of War. 

P. S. — I am authorized to say that Ex-Governor-General Ide, who 
is familiar with the general features of this compromise, fully 
approves it. The general terms of the compromise have been sub- 
mitted to the Commission, who have also approved it. 

I do not mention in the list of trusts particularly referred to the 
Colegio Santa Isabela and the Santa Potenciana, because one of 
these — Santa Isabela — is confessedly clearly a church trust, and 
Santa Potenciana is confessedly a trust to be administered by the 
civil government. 

Second P. S. — I ought to add, with respect to the amended charter 
which it is proposed to grant to the Banco Espafiol-Filipino, that an 
exactly similar Spanish charter was confirmed in toto to the Bank of 
Porto Eico by an act of Congress, and in that charter the Porto Rican 
bank was given the authority to issue notes to three times the value of 
its capital stock, and in the act of confirmation there was no attempt 
to give any additional security for the redemption of these notes. 
This would seem to be a precedent abundantly justifying what we 
are doing in this amended charter. 

The White House, 

July 4, 1907. 
Approved. The appropriate action to make the approval effective 
will forthwith be taken. 

Theodore Roosevelt. 



TENTATIVE AGREEMENT BETWEEN SECRETARY OF WAR AND 
ARCHBISHOP HARTY. 



This memorandum of agreement, entered into by Archbishop Harty, 
Archbishop of Manila, representing the Roman Catholic Church in 
the Philippine Islands, and the Secretary of War, representing the 
government of the Philippine Islands, is intended to form the basis 
of a compromise of a number of controversies arising between the 
Roman Catholic Church and the government of the Philippine 
Islands, and to end all such controversies. 

The controversies arising are as follows : 

First. The right of the Roman Catholic Church, on the one hand, 
and the Philippine government, on the other, to administer certain 
charitable trusts, and to take possession of, and assume control of, the 
following estates, to wit: 
' The buildings, estates, and hospital plant of the Hospicio San Jose. 

Second. The buildings, estates, and hospital plant of San Juan de 
Dios, including all other estates or investments of said hospital of San 
Juan de Dios. 

Third. The Colegio de San Jose, now in litigation in the supreme 
court of the Philippine Islands, including buildings, hospital plant, 
or other property of the Colegio de San Jose, and any hospicios, 
estates, or investments held by it. 

Fourth. The hospital of San Jose in Cavite, including the land and 
buildings thereof in Cavite. 

Fifth. The estate, hospital plant, buildings, and investments, or 
other property of the Colegio Santa Isabela. 

Sixth. The buildings, hospital plant, estates, and all other prop- 
erty and investments of the hospital and foundation of San Lazaro. 

Seventh. The buildings, plant, foundation, and estates known as 
the Santa Potenciana. 

Also the controversy between the Banco Espahol-Filipino, in which 
the archbishop of the diocese of Manila, representing the Roman 
Catholic Church, represents and controls a majority of the capital 
stock, presents the issue whether the rights, privileges, and immuni- 
ties conferred upon the Banco Espanol-Filipino continue unimpaired 
under the American sovereignty brought about by the Treaty of Paris, 
the Philippine government contending that the right to put in circu- 
lation notes of issue ceased to be and was dependent thereafter upon 
any grant of the American or Philippine government. The bank 
on its part claimed that under the terms of the Treaty of Paris the 
right to issue such notes continued unimpaired, and that the charter 
as granted by the Spanish Government continued without impair- 
ment under American sovereignty. 

(90) 



91 

Now, therefore, for the purpose of ending all these controversies, 
the following informal agreement is entered into, to be subject to the 
approval of the Philippine Commission, and to be carried into effect 
by the entry of consent decrees, in the proper courts, in such form as 
to confirm the titles in the persons by this agreement to take the 
respective properties, and by such legislation of the Philippine Com- 
mission as may be necessary to further confirm and put into execution 
said agreement, and also subject to the approval of the Secretary of 
War, and of Archbishop Harty, through his agent, Festus J. Wade, 
of the statutes of the bank as they shall be revised, such revision to 
contain a restriction on the amount of money to be loaned by the bank 
on real estate security. 

In consideration of the foregoing, and in the manner prescribed 
herein, the archbishop of the diocese of Manila, for the Roman 
Catholic Church in the Philippine Islands, is to take possession and 
hold in absolute title, free from all claims or demands of the Philip- 
pine government, the land and property, real, personal, and mixed, 
set forth and described under sections one, two, three, four, and five 
hereof, namely: Hospicio San Jose; San Juan de Dios; Colegio de 
San Jose.; Hospital of San Jose in Cavite, and the Colegio Santa 
Isabela. 

It being understood, however, that the College of San Jose is to be 
surrendered and given into the possession and ownership of the arch- 
bishop of Manila for the specific purpose of its foundation. 

And to the same extent and in the same manner the archbishop of 
Manila, for the Roman Catholic Church, relinquishes all claims and 
demands of any nature and to any extent upon the buildings, plant, 
foundation, and estates known as Santa Potenciana, and also upon 
the buildings, hospital, plant, church, estates, and all other property 
and investments, real, personal, or mixed, of the hospital and founda- 
tion of San Lazaro, except as follows : 

First. The Archbishop of Manila is to take, hold, and own all of 
block numbered 156, as platted and set forth upon the map or plat 
hereto attached and made a part hereof for the purpose of this agree- 
ment, said conveyance being in consideration of the relinquishment 
by the archbishop of Manila of any claim or demand to the church 
and land upon which it is situated, and which is attached to and a 
part of the San Lazaro Hospital. 

Second. All of the blocks platted and set forth upon the map hereto 
attached, beginning with block numbered 159 and up to and includ- 
ing block numbered 210, shall be divided as follows : 

The Archbishop of Manila, his agent or representative, shall select 
fifty hectares belonging to the San Lazaro estate north of the second 
street running parallel to the northern boundary of the present hos- 
pital ground, provided there be fifty hectares in this property. The 
selection shall be made by blocks, platted and numbered from 159 to 
210, inclusive, upon the accompanying map or plat. The area of this 
described property shall be determined in hectares, and if it exceeds 
fifty hectares the selection shall be as follows : 

First. The archbishop or his representative will select a block and 
then the representative of the Philippine government will select 
a block, and alternate selections will follow until the archbishop shall 



92 

have received fifty hectares of land. If from the survey it is shown 
that these alternate selections by the archbishop and by the Philip- 
pine government will not give to the archbishop the required fifty 
hectares of land, the Philippine government shall withdraw from 
further selection as soon as its proportionate amount has been re- 
ceived, and give the balance of the property to the archbishop, it 
being understood that both the parties hereto agree to the dedication 
to public use of the streets and alleys shown on said plat or map, 

In relation to the Banco Espanol-Filipino, the following is agreed 
by and between the parties hereto : 

I. That the corporate existence of the Banco Espanol-Filipino shall 
be extended twenty-five years from January 1st, 1903. This period 
may be extended at the request of the majority of the stockholders of 
the bank, provided such request be made at least one year before the 
expiration of the twenty-five years mentioned. 

II. That the bank is authorized to change its name, at its option, 
to be known as the Bank of the Philippine Islands, or the Philippine 
Bank. 

III. That the government of the Philippine Islands renounces all 
rights which it may have derived under Spanish law to appoint the 
governor and other officers of the bank or to interfere in any way 
with its administration, except to make examination of its solvency 
and supervise its conduct in the interest of the public in the same 
manner as such examination and supervision are or may be exercised 
over national banks in the United States and as prescribed by the 
laws of the Philippine Islands. 

IV. That upon compliance with the preamble of this agreement, 
validity is given to all acts heretofore performed by the bank which 
would otherwise be legal and whose validity might be questioned by 
reason of the failure of the bank to comply with its statutes in regard 
to the participation of the government in the management of the bank. 

V. That the government of the Philippine Islands renounces all 
right and title derived from Spanish law and the existing statutes of 
the bank to a loan of any money to the treasury of the Philippine 
Islands. 

VI. That the treasurer of the Philippine Islands, provincial treas- 
urers, and other authorized public officials shall, from time to time, 
deposit with the bank and its branches, upon such terms as may be 
prescribed by the government of the Philippine Islands, such public 
moneys and trust funds as may be available for this purpose without 
discrimination against the bank or in favor of other institutions ; but 
this clause shall not bind such officials to make or maintain such de- 
posits when, in their opinion, it is inadvisable. 

VII. That the treasurer of the Philippine Islands and all assistant 
treasurers and provincial and municipal treasurers and other public 
officials shall be directed to receive the notes of the Banco Espanol- 
Filipino for public dues, without discrimination in favor of the notes 
of other banks or the certificates of the Philippine treasury, so long 
as said notes are paid in the lawful money of the Philippine Islands 
or of the United States without discount and on demand at the bank 
and its branches. 

VIII. That the capital stock of the Banco Espanol-Filipino shall 
be authorized to an amount not to exceed ten million pesos, and its 



93 

circulating notes shall hereafter be issued under the following limita- 
tions of amounts and conditions : 

(a) To a present amount not exceeding two million four hundred 
thousand pesos, which shall be secured by the paid up and unim- 
paired capital of the bank and by the value of the surplus as ascer- 
tained by the governor of the Philippine Islands; and in case such 
capital and surplus shall not, in the opinion of the governor of the 
Philippine Islands, be equal in value to the amount of circulation 
herein authorized, then said governor may require a contraction of 
such circulation until it shall not exceed the value of the capital and 
surplus of the bank, or the deposit with him of commercial paper 
conforming to the statutes of the bank and acceptable to him, for 
any excess in the amount of circulation above the value of the capital 
and surplus as ascertained and determined by him. And said bank 
is hereby authorized to issue its circulating notes secured by its 
capital as herein provided in equal proportion with such increase 
of paid in capital stock in cash, not exceeding nine million pesos; 
and all notes so issued shall be governed by the provisions of this 
section. 

(h) To a present additional amount not exceeding six hundred 
thousand pesos upon deposit with the treasurer of the Philippine 
Islands of bonds of the United States, bonds or certificates of the 
government of the Philippine Islands, bonds of the city of Manila, 
stock or bonds of railways or mortgage banks upon which interest 
or principal has been guaranteed by the government of the Philip- 
pine Islands, or other securities acceptable to the treasurer of said 
Philippine Islands, and the percentage of circulation to be allowed 
upon the face value or market value of each of said class of securities 
shall be determined by said treasurer of the Philippine Islands. 
Such notes may be issued at the discretion of the bank, subject only 
to the condition that the securities deposited shall be acceptable in 
character and amount to the treasurer of the Philippine Islands, and 
without regard to whether issues have been made or applied for 
under other provisions of this act. And, in case of the increase of 
the paid up and unimpaired capital of the bank from two million 
four hundred thousand pesos to three million pesos, the treasurer of 
the Philippine Islands shall deliver to the bank the securities de- 
posited with him to cover circulating notes under this paragraph (h). 

It being the intention that the total circulating notes issued under 
this agreement shall never exceed in amount nine million pesos; se- 
cured by at least an equal amount of the paid up and unimpaired 
capital of the bank ; except as hereinbefore provided under paragraph 
(6) of section VIII. 

IX. That all outstanding notes of the bank shall, after January 
1st, 1908, constitute a preferred lien upon the assets of the bank, ex- 
cept as to such securities as have been specifically deposited under spe- 
cial agreements with public officials for the safe-keeping of public 
moneys. 

X. That the bank renounces all claim to the exclusive privilege of 
issuing notes in the Philippine Islands or to any other exclusive priv- 
ilege not set forth in this act; but the government of the Philippine 
Islands will make no laws or regulations affecting the bank, or im- 
posing charges or taxation upon it, which shall not apply equally to 



94 

other banks of a similar type operating under similar conditions, and 
will not authorize any bank with an ascertained capital and surplus 
of less than two million pesos to issue circulating notes in the Philip- 
pine Islands; but this provision shall not preclude the government 
from granting special privileges to agricultural banks, savings banks, 
mortgage banks, or other institutions of special type whose principal 
business is not commercial banking. 

XL That in case the paid-up capital of the bank is increased by 
the bona fide sale of new stock at not less than par for cash, the gov- 
ernment of the Philippine Islands shall authorize an increase in the 
amount of circulating notes equal in amount to said increase in 
capital, but the total circulating notes so issued shall in no case exceed 
in amount nine million pesos (^9,000,000). 

XII. That the notes issued under the provisions of paragraph (a) 
of Section VIII of this agreement shall pay a tax at the rate of one- 
half of one per centum per annum ; and the notes temporarily issued 
under the provisions of paragraph (5) of said Section VIII of this 
agreement shall pay a tax at the rate of one per cent per annum, such 
taxes to be assessed upon the amount of notes actually in circulation 
outside the bank and its branches, upon the average circulation per 
week or at fixed intervals not less frequently than once a month, to be 
determined by regulations made by the treasurer of the Philippine 
Islands. 

XIII. That the notes of the bank shall hereafter be issued to the 
bank by the treasurer of the Philippine Islands, who shall make 
requisitions upon the Bureau of Insular Affairs at Washington for 
such a supply as may be necessary to anticipate reasonable demands 
and keep such notes in his custody in the treasury of the Philippine 
Islands ; but said notes shall not have validity as currency until the 
seal and signatures are attached by the bank. 

In witness whereof this memorandum of agreement in duplicate 
has been signed, this 8th date of June, A. D. 1907, by Jeremiah J. 
Harty, Archbishop of Manila, as representing the Eoman Catholic 
Church, and by Wm, H. Taft, Secretary of War, as representing the 
government of the Philippine Islands. 

Jeremiah J. Harty. [seal.] 

Archbishop of Manila. 
Wm. H. Taft. [seal.] 

Secretary of War, 
In presence of : 

Eugene De L. McDonnell. 
Paul Charlton. 






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ARCHBISHOP HARTY'S PETITION TO THE PRESIDENT. 



Mr. President : I am an American, and appreciate the good inten- 
tions of my country and the rectitude of those men whom it has 
sent to the Philippines to, in its, name, take possession of and govern 
these islands. Accustomed as they are to the entire separation of 
Church and State, under which each administers that which pertains 
to it with absolute independence of the other, they are unable to 
understand that the King of Spain or his Governor-General in the 
Philippines should intervene in private affairs of the Church, nor 
could they admit that the property of the foundations, in which the 
Crown to some extent intervened, belonged to the Church. And this 
reasoning was correct, judging by the legislation of North America ; 
no governing power in South America would concur therein, because 
none of those countries are unacquainted with the Apostolic Letters 
issued by Pope Julius II on July 28, 1508, granting to the Kings of 
Spain, as a reward of their fidelity, and as an incentive to carry on 
the arduous undertaking of discovering new islands and. extending 
over them Christianity, the right of Patronate in all the countries 
already or to be discovered, that is, the right to indicate -fitting per- 
sons for appointment to any churches whatever, exercising this right 
over the churches and all pious institutions; — nor are the Spanish 
laws decreed by virtue of this concession and which are contained in 
the " Digest of the Laws of the Indies," unknown in those countries. 
And that is the reason for the extensive intervention which the Kings 
of Spain and their Viceroys in Spanish America, as well as their 
Governors- General in these Islands exercised in ecclesiastical matters 
the Viceroys and Governors- General exercised in the King's name 
the Viceroyal Patronate, and it was thus expressed in their official 
communications relating to the matters of the Church, for the dis- 
patch of whose business they had a special office, and the King exer- 
cised the Patronate in the name of the Pope, who was the grantor 
thereof. But the Patronate does not signify the " property " of the 
Church, nor the ownership of the properties of the foundations over 
which it is exercised, but only the right granted in the concession; 
the ownership pertains to the Catholic Church, and if on account of 
any event whatever the Patronate ceases, as in the present case, the 
privilege granted reverts to the Church, and all things comprised in 
the grant become again under the jurisdiction of and are governed by 
the common ecclesiastical law. 

The Patronate does not only represent an honor to be received, or 
a privilege to be exercised; it also represents duties to be fulfilled, 
because the Patron is obliged to contribute a portion for the con- 
struction of Churches, and to assist the hospitals and other founda- 

(95) 



96 

tions over which he exercises the Patronate; the Spanish Govern- 
ment further paid a pension to all ecclesiasts who held office in the 
cathedrals and parishes, and also the amount necessary for the sup- 
port of the Catholic worship : The Insular Government does not desire 
these honors and privileges, and is unwilling to give anything for the 
Church, because the American Constitution forbids ; but on the other 
hand it asks what no Patron has ever asked because he had no right 
thereto — ownership of the pious foundations. 

The last Spanish Governor-General well understood the doctrine 
just expressed, and upon the termination of Spanish sovereignty in 
the Islands, by virtue of the Treaty of Paris, directed a communication 
to my predecessor, the Most Reverend B. Nozaleda, then Archbishop 
of Manila, informing him that Spanish sovereignty in this Archi- 
pelago and the exercise therein of the Royal Patronate were about 
to cease; wherefore he furnished him this information so that he, as 
Prelate, might take charge of the foundations and Pious Works which 
pertained to the Royal Patronate. 

COLLEGE OF SAN JOSE. 

D. Esteban Rodriguez de Figueroa, a Spaniard who had been 
Governor of Mindanao, by a will executed in 1596 ordered a house to 
be built next to that of the Company of Jesus in 'the City of Manila 
which should serve as a Seminary for boys ; to which end he left prop- 
erty, intrusting to the Father Provincial of the Company of Jesus 
of said City the Patronate and administration of said College. In 
August, 1601, the Vicar-General, through the Ecclesiastical Chapter, 
the See being vacant, granted to Father Luis Gomez, who had been 
appointed Rector of the College of San Jose by the Company of Jesus, 
a license to found said College " where the youth may be educated and 
instructed in good manners and letters, and ministers for the Holy 
Gospel reared," the Governor-General, in the name of the King, issu- 
ing on the same day his license for its foundation. 

On May 3, 1722, at the request of the Procurator General of the 
Company of Jesus, Philippines Province, the King of Spain received 
the College under his Royal Protection, and granted the title Royal ad 
honorem u without burden to my Royal Treasury " to the Seminary of 
Grammatical, Philosophical and Theological studies, known as San 
Jose, founded by D. Esteban Rodriguez de Figueroa, on account of 
the great progress which the said College has made and is making in 
virtue and letters, and the many learned men who have come from it. 

The Company of Jesus having been suppressed in the Philippines 
in the year 1768, the College of San Jose remained under the Royal 
Protection, and by Royal Order of March 21, 1771, it was ordered that 
its Rector be appointed from those of good conduct who had been stu- 
dents thereof, which appointment ordinarily fell to a capitulary of 
the Cathedral. 

The College thus continued till the year 1875, when the King of 
Spain, exceeding, according to my understanding, the faculties which 
he possessed as Patron, ordered its income dedicated to the support of 
the faculties of Medicine and Pharmacy w T hich he at the same time 
ordered established in the College, whose administration should be 
under the care of a Director appointed by the Vice-Royal Patronate; 
the College has continued till to-day in that manner. 



97 

HOSPITAL OF SAN JUAN DE DIOS. 

The Hospital of San Juan de Dios was founded in the year 1596 by 
the Brotherhood of the House of Misericordia established in Manila 
with the approval of the Ordinary, that the sick servants of Spaniards, 
Peninsula Spaniards and Mestizos might be cured therein. At that 
time there already existed in Manila the Hospital of San Gabriel, for 
Chinese, founded by an Archbishop ; that for natives, which dates 
from the first days of the evangelization of these islands and, thanks 
to the charity of the first Bishop of Manila, intrusted to the Fran- 
ciscan Fathers; and the Military Hospital, founded by the- Govern- 
ment with the name of Royal Hospital. 

The above classification is necessary because the Hospital of San 
Juan de Dios, formerly known as the Hospital of the Misericordia, 
on account of its origin, has been frequently and is still sometimes 
confounded with that of the Franciscan Fathers; as some people 
likewise confound this charitable institution with the Royal Hospital, 
which error arises from the mistaken idea that the Government was 
the founder of the Hospital of San Juan de Dios. 

The work of the Hospital of the Misericordia (to-day San Juan de 
Dios) developed slowly, commensurate with the amounts it received 
from pious persons and the gifts worthily made to it. In this work 
the Misericordia was never assisted by the Government, and the latter 
never exercised any control over it, direct or indirect. 

The Brotherhood of the Misericordia administered its Hospital as 
its own property, and was never at any time molested in the peaceful 
possession thereof or the free exercise of its government and admin- 
istration as the owner and sole founder of that institution of charity. 

So certain and strong was its right, that the King, by Royal Decree 
of December 5, 1659, issued with the object of authorizing the transfer 
of this Hospital to the Hospitalary Order of San Juan de Dios, makes 
known that the Patronate of this Hospital belongs to the Brother- 
hood of Misericordia. 

On May 31, 1656, the Brotherhood of Misericordia made an irre- 
vocable gift of its hospital to the Order of San Juan de Dios by a 
public writing before the Notary, D. Tomas de Palenzuela y Zur- 
baran, together with all the properties pertaining to it, but reserving 
the right of Patronate over the Hospital. 

The Order of San Juan de Dios changed the name of the insti- 
tution to that of their Holy Founder, and administered it independent 
of the civil authorities and of the Royal Patronate till the year 1865, 
when, for lack of proper personnel and other reasons which are not 
germane to the case, they ceased administering the said Hospital in 
conformity with the Royal Order of August 17th of that year, at 
which time the Spanish Government first invoked the privilege of its 
Patronate. 

A board, composed of gentlemen of the city of Manila, was desig- 
nated by the new Patron to administer the Hospital of San Juan de 
Dios. 

Upon the change of sovereignty over these Islands the Board of 
Directors delivered the said Hospital and all its properties to the 
Archbishop of Manila, who exercises thereover the Patronate by 
his own right, as Prelate of this Diocese, now that the privilege of 
Royal Patronate has ceased. 



98 

HOSPITAL OF SAN LAZARO. 

The Hospital of San Lazaro was founded inside the old City of 
Manila by a Franciscan lay brother in the year 1578. In March, 1583, 
this Hospital was entirely destroyed in the great fire which consumed 
nearly the whole City. 

The first Bishop of Manila, D. Domingo de Salazar, built at his own 
expense a new hospital within the said City for the poor natives, and 
constructing a special department for lepers, intrusting its admin- 
istration to the Franciscan Fathers. In 1603 this Hospital was again 
destroyed by fire. 

The Franciscan Fathers bought sufficient land to erect a new hos- 
pital for lepers between the old town of Dilao and Malosac, and there 
established it. 

Governor Corcuera attempted to exercise undue authority by reason 
of the Vice-Royal Patronate over this Hospital, and the Franciscans 
protesting against his decision, besought the King, who disapproved 
the measures taken by Corcuera in his Eoyal Decree in the year 1641. 

In 1662, by reason of the preparation of defenses of the City of 
Manila, during the Governorship of General Manrique, the building 
of this Hospital was destroyed. Later another building was con- 
structed between the old town of Dilao and Balete. 

By the Royal Order of April 2, 1767, the Jesuit Fathers were 
expelled from the Spanish domain, and the Treasury took over all 
their properties. The said Treasury wrongly considered that the 
property of San Lazaro, known as Mayhaligue, was private property 
of the Company of Jesus, omitting to take into account that it was 
an ecclesiastical benefice, and that if the Jesuits enjoyed the fruits 
thereof it was in their capacity of parish priests of Santa Cruz. 
The Government in the Philippines persisted in this error, and it may 
be that, the origin of the property being known to it, it wished to 
make amends for the wrong done, and the Vice-Royal Patron, Senor 
Basco, granted to the Franciscan Fathers that which had formerly 
been used for the' support of the Cult, that is, the hacienda of 
Mayhaligue. 

The concession to the Hospital of San Lazaro of the lands of 
Mayhaligue took place in 1783, in compensation for the damage 
caused by having to abandon the Hospital in Balete under military 
orders. The King approved this transfer in 1784. 

The Franciscans took possession of the new house in 1785, and of 
the Hacienda in the year 1786. 

The Hacienda of Mayhaligue, to-day known as San Lazaro, and 
which constitutes part of the property of the ^Hospital of that name, 
was originally an ecclesiastical benefice belonging to the Parish of 
Quiapo, to which Parish said Hacienda had belonged since its crea- 
tion, its products serving for the proper maintenance of said parish. 

In this Hacienda there were a large number of Chinese settlements, 
similar to those in the old Parian, whose evangelization was in 
charge of the Dominican Fathers of San Gabriel. 

To procure the more rapid conversion of the Chinese of Mayha- 
ligue to Christianity, the Jesuit Fathers asked of the ecclesiastical 
authorities the division of the parish of Santa Cruz, in Manila, 
adjoining the parish of Quiapo, to establish there a new parish inde- 
pendent of the Mother Church, to include all the lands of Mayha- 



99 

ligue. The Bishop of Cebii, Ecclesiastical Governor of Manila, Father 
Pedro de Arce, on June 20, 1619, without complying with the requi- 
sites of law, and without taking into account that the See of Manila 
was then vacant, transferred the lands of Mayhaligue to the Com- 
pany of Jesus. The Cathedral Guild protested against this transfer, 
and for five years the Jesuits did not make use of such illegal cession. 

An account of this was given to the King, as Patron of the Churches 
of Asia, and by his Royal Decree of November 8th, 1645, he declared 
illegal and void the grant of the division of Santa Cruz, as well as 
others which had been made to the Jesuit Fathers. 

During the time of D. Hernando Guerrero the grant of the division 
of Santa Cruz Parish to the Jesuit Fathers was again discussed, and 
this Archbishop declared null and of no effect the said division, order- 
ing at the same that the Doctrine of Santa Cruz, together with its 
properties, be returned to the Parish Church of Quiapo. 

Later, and on account of the differences which this same Archbishop 
had with Governor Corcuera on account of his defense of the dio- 
cesan authority and the rights of the Church, said Governor exiled the 
Archbishop to Mariveles. The Guild and the Religious Orders asked 
the Governor to raise the exile of the Archbishop, and the said Gover- 
nor, in acceding to their request, laid down certain conditions, one 
of which was to the effect that the Archbishop must again grant to 
the Jesuit Fathers the division of Santa Cruz Parish. The Prelate 
refused to accede to this, but in view of the need which the Church 
had of a Pastor, he gave in against his will and through force majeur. 

On the 13th of August, 1898, upon the surrender of the City of 
Manila, the Franciscan Father in charge of the Hospital withdrew 
to the Convent in Manila so as not to fall a prisoner in the hands of 
the insurrectos, who entered Manila from that quarter. Every day 
thereafter he sent from the Convent the necessaries for the support 
of those in the Hospital. As the Hospital was situated at a point 
controlled by the insurrectos, the Provincial of the Franciscan Order 
informed the American Commanding General that he could not ad- 
minister it unless he were furnished soldiers for protection. The 
General did not furnish the protection asked for, but took posses- 
sion of said Hospital and its properties, and up to the present neither 
the Military Government nor the Civil which succeeded it have 
returned the administration of the Hospital to its legal owners and 
administrators. 

HOSPICIO OF SAN JOSE. 

The foundation of the Asylum (Hospicio) of San Jose dates from 
the year 1782, and is due principally to D. Francisco Gomez Enriquez, 
a Peninsular Spaniard, and to his wife, Da. Barbara Verzosa, who 
dedicated to this benefice, the former $4,941, and the latter a credit 
of $24,000 and odd pesos, as well as an urban property, to the end 
that by putting this capital into the Acapulco commerce it would 
produce enough to maintain the pious work of its institution. 

The trustee of the founders, using the powers conferred upon him, 
placed the Hospicio under the protection of the Archbishop of Ma- 
nila, as " father of the poor " (the words are textual), and it was put 
in charge of the Administrator of the Obras Pias of the Mitra. 

The Spanish Colonel D. Felipe Cerain dedicated to the Hospital 
more than $31,000 in the year 1806. 



100 

The Archbishop of Manila, in view of the fact that the Hospicio 
was a true pious work and desiring to aid it, donated thereto large 
sums accruing from various other pious works. 

This beneficent institution, destined to shelter poor beggars of all 
classes and ages who were without means of support, was not really 
begun till the year 1809. 

The construction of the Hospicio was carried on with private funds 
and without any assistance whatever from the Government. 

The Hospicio bought with its own funds from the Spanish Gov- 
ernment a house, in which the institution was installed. 

There had existed from the creation of the Hospicio, for purposes 
of administration and government, a Board composed originally of 
the Governor-General, in his capacity of Vice-Royal Patron, Presi- 
dent, two dignitaries of the Cathedral chapter and other persons of 
the community, none of whom exercised his functions as a State 
official, and whose services were always honorary -and gratuitous. 
Later the Presidency fell to the President of the Supreme Court, and 
some years thereafter to the Provincial of the Augustinian Order ; at 
the present time the office is filled by a dignitary of the Cathedral. 

The appointment of the gentlemen composing the Board of the 
Hospicio were made by the Governor-General, as Protector and in his 
capacity as Vice-Royal Patron, and he never exercised this preroga- 
tive as Civil Superior Chief. 

The acquisition of the property which the Hospicio had formerly 
purchased of it appearing desirable to the Insular Spanish Govern- 
ment, for the purpose of installing a cigar factory therein, the Gov- 
ernment asked that it be sold back to it, which was done. 

The loss of the American Colonies to Spain occasioned a consider- 
able diminution of the capital of the Hospicio, wherefore the Spanish 
Government, as compensation for the benefits derived from the Insti- 
tution, granted it various credits from the extinguished Meztizo Bat- 
talion, some of which were very difficult of collection, and also 1,000 
pesos yearly from the Community Funds, together with 1\ per cent 
cereal tax. The appropriation of the thousand pesos yearly was very 
shortly suspended. The Community Funds were for the greater part 
composed of the funds known as the Sanctorum, — the proceeds of the 
special assignments for the support of the Cult and Clergy. 

The present building of the Hospicio of San Jose was constructed 
in the year 1880 with private funds of the Hospital, upon land belong- 
ing to the Hospital of San Juan de Dios known as the Island of Con- 
valescence, and which was acquired by the Hospicio in exchange for 
a certain loan to the Hospital of San Juan de Dios. 

The Board of the Hospicio, upon the change of sovereignty in these 
Islands, considering the Hospicio of San Jose a pious work {obra 
fid) , as it had always been considered, made formal delivery of said 
Institution, together with all its properties, to the Archbishop of 
Manila, and from that time on the said Archbishop is the only one 
who appoints the personnel necessary for the management and admin- 
istration of the Hospicio, in his capacity of Protector thereof. 



101 

VALUATION OF THE FOUR FOUNDATIONS. 
COLLEGE OP SAN JOSE. 

The value of the building, with all its furniture and fixtures, and 
its two haciendas of Lian (Batangas) and San Pedro de Tunasan 
(La Laguna), is calculated to be five hundred and forty-seven thou- 
sand dollars and fifty cents United States currency ($547,000.50). 

SAN JUAN DE DIOS HOSPITAL. 

The value of the building, with its furniture and fixtures, and its 
hacienda of Buenavista, is calculated to be one million one hundred 
and four thousand dollars, United States currency ($1,104,000). 

SAN LAZARO HOSPITAL. 

The value of the buildings and its hacienda is calculated to be 
two million dollars, United States currency ($2,000,000). 

HOSPICIO OF SAN JOSE. 

The value of the building with all its furniture and fixtures, and 
the house belonging to the Hospicio on Calle Eosario is calculated to 
be four hundred and fifty thousand dollars and fiftv cents. United 
States currency ($450,000.50). 

There are, besides, other pious foundations, such as the Hospital of 
San Jose of Cavite, the Misericordia, in which are comprised the 
College of Santa Isabel and Santa Potenciana, and some others of 
minor importance, as for instance, Capellanias (chaplaincies), which 
serve for ordinations. I will say and affirm with respect to all the 
Pious Foundations in this Diocese that they are ecclesiastical and not 
civil ; that the State, has never intervened in them, that is to say, as a 
civil entity, except the King of Spain as Patron in the name of the 
Pope, or the Governor-General as Vice-Royal Patron, in name of the 
King, as I have hereinbefore set forth. 

The right, then, to these foundations is exclusively of the Catholic 
Church, as is recognized by the prominent jurists, and I am confident 
that the courts of justice will support my right if these questions are 
carried thereto. I concur, notwithstanding, in the fear which Mr. 
Taft expresses as to the litigation being long drawn out; this how- 
ever, will not be due to the legal difficulties involved therein, but to 
the inexplicable delays which occur, as is now the case in the San 
Jose College suit — now pending about six years without a decision 
being rendered — which is not a very favorable indorsement of the 
prompt administration of justice in the Philippine Islands. 

In order to avoid litigation the worthy Secretary of War suggests 
that a compromise might be made whereby all these questions could 
be adjusted, the Government retaining the Foundation to San Lazaro 
and abandoning all claim of right and power to administer the other 
Foundations. That is to say, we are asked to make an absolute ces- 
sion of the Hospital and Hacienda of San Lazaro, which, while not 
the largest, is the most important and valuable. 

I could not accept a compromise in this form, because I consider it 
to be ruinous, notwithstanding, I am disposed to enter, not into a 
transaction, which in my judgment is not in order because there are 
22380—08 8 



102 

no doubtful rights involved, but into an agreement, the basis of which 
might be any of the following: 

First, The Catholic Church will cede to the Insular Government 
the Hacienda of Mayhaligue, to-day called San Lazaro, reserving to 
itself the lands and buildings situated within the walls which sur- 
round the same, and also the land comprised within the following 
limits : Bounded on the South by Calzada de Bilibid ; on the East by 
Calle Cervantes ; on the West by an Estero ; and on the North by the 
said walls of San Lazaro. This land contains approximately 50 hec- 
tares, and the entire Hacienda, according to the latest plans, contains 
161 hectares. 

If this proposition is not accepted, it is proposed that — 

Second. The Catholic Church will cede to the Insular Government 
the Hacienda of Mayhaligue, reserving to herself the Church Edifice 
or Temple contiguous to the Hospital, the 50 hectares comprised 
within the limits expressed in the above basis, and also the land com- 
prised between Calles Oroquieta and Cervantes to the East and West 
and Calles Bilibid and Quiricada to the South and North, — 7 hectares 
approximately in extent. 

If this basis be not accepted, it is suggested that — 

Third. That is, divide the Hacienda into two equal parts, one of 
the Catholic Church and the other for the Government ; or failing 
this, to give to the Church in money the value of the half, as per 
assessment. 

The Archbishop of Manila has a right to this Hacienda. 

And to prove that this is so, and that neither the State nor the 
Municipality has any right of ownership over the land of this 
Hacienda, I need not go into any long reasoning ; I will present only 
one proof, but it is irresistible: THE SPANISH GOVERNMENT 
BOUGHT OF AND PAID TO THE CHUPvCH, THE AMOUNT 
OF THE VALUE OF LAND NECESSARY TO CONSTRUCT 
BILIBID PRISON, SITUATED ON THE SOUTHEAST COR- 
NER OF SAID HACIENDA, AS MAY BE SEEN BY THE 
CERTIFICATE ISSUED BY THE CHIEF OF THE BUREAU 
OF ARCHIVES OF THESE ISLANDS, AND THE PLAN 
THEREOF, WHICH DOCUMENTS I SEND HEREWITH. 

NO ONE BUYS THAT WHICH IS HIS. 

I trust, that one of these propositions will be accepted. If it be 
desired that the Church expand, work and exercise her good influence 
for the morality, well-being, and tranquillity of the people, she must 
not be deprived of the elements necessary for sustaining life; as in the 
end, whatever she receives and has, is but to use and spend for the 
benefit of the people itself, whose betterment and happiness form her 
constant aspiration. 

And if, after the terrible devastation wrought by the war and in- 
surrection, and the enormous losses incident thereto which the Church 
in the Philippines has suffered in its material interests, she is to be 
asked to cede all the Hacienda of San Lazaro, it would be as well to 
ask her to seclude herself within the walls of her almost ruined 
Temples and to renounce the work which constitutes her life. 

Jeremiah J. Harty, 
Archbishop of Manila. 

To His Excellency, Theodore Roosevelt, 

President United States. 



PROPOSALS MADE BY ARCHBISHOP HARTY TO THE SECRETARY 

OF WAR. 



Washington, D. C, March 1, 1907. 

Dear Mr. Taft : I have the honor to submit the following propo- 
sitions tending toward a speedy adjustment in the matter of the San 
Lazaro estate, Manila, P. I. : 

First. The Catholic Church will cede to the insular government the 
hacienda of Mayhaligue, to-day called San Lazaro, reserving to 
itself the lands and buildings situated within the walls which sur- 
round the same, and also the land comprised within the following 
limits : Bounded on the south by Calzada de Bilibid ; on the east by 
Calle Cervantes; on the west by an estero, and on the north by the 
said walls of San Lazaro. This land contains approximately 50 
hectares, and the entire hacienda, acording to the latest plans, contains 
161 hectares. 

If this proposition be not accepted, it is proposed that — 

Second. The Catholic Church will cede to the insular government 
the hacienda of Mayhaligue, reserving to herself the church edifice 
or temple contiguous to the hospital, the 50 hectares comprised within 
the limits expressed in the above basis, and also the land comprised 
between Calles Orquieta and Cervantes to the east and west, and 
Calles Bilibid and Quiricada to the south and north, 7 hectares, 
approximately, in extent. 

If this basis be not accepted, it is suggested that — 

Third. That is, divide the hacienda. And to prove that this is 
true, and that neither the State nor the municipality has any right 
of ownership over the land of this hacienda, I need not go into any 
long reasoning. I will present only one proof, but it is irresistible : 
THE SPANISH GOVERNMENT BOUGHT OF AND PAID TO 
THE CHURCH, THE AMOUNT OF THE VALUE OF LAND 
NECESSARY TO CONSTRUCT BILIBID PRISON, SITU- 
ATED AT THE SOUTHEAST CORNER OF SAID HACI- 
ENDA, AS MAY BE SEEN BY THE CERTIFICATE ISSUED 
BY THE CHIEF OF THE BUREAU OF ARCHIVES OF 
THESE ISLANDS, AND THE PLAN THEREOF, WHICH 
DOCUMENTS I SEND HEREWITH. 

NO ONE BUYS THAT WHICH IS HIS. 

I trust that one of these propositions will be accepted. If it be 
desired that the church expand, work, and exercise her good influence 
for the morality, well-being, and tranquillity of the people, she must 
not be deprived of the elements necessary for sustaining life; as, in 
the end, whatever she receives and has is but to use and spend for 
the benefit of the people itself, whose betterment and happiness form 
her constant aspiration. 

(103) 



104 

And if, after the terrible devastation wrought by the war and in- 
surrection, and the enormous losses incident thereto which the church 
in the Philippines has suffered in its material interests, she is to be 
asked to cede all the hacienda of San Lazaro, it would be as well to 
ask her to seclude herself within the walls of her almost ruined tem- 
ples and to renounce the work which constitutes her life. 

Jeremiah J. Harty, 
Archbishop of Manila. 

To His Excellency the Hon. Wm. H. Taft, 

Secretary of War. 

Should you accept any of the above-mentioned propositions, I 
wish it to be understood that the Government will withdraw all 
claims to the title of the properties known as the College of St. 
Joseph, the Hospice of St. Joseph, the College of St. Isabel, the 
Hospital of St. John of God, in Manila, and the Hospital of St. 
Joseph, in Cavite, with the properties belonging to them. 

J. J. HARTr, 

Archbishop of Manila. 



DECISION OF THE PHILIPPINE COMMISSION IN THE SAN JOSE 

COLLEGE CASE. 



BEFORE THE UNITED STATES PHILIPPINE COMMISSION. 

T. H. Pardo de Tavera and others, for themselves and other inhabit- 
ants of the Philippine Islands, against the rector of the University 
of St. Thomas, a Dominican monk, and the Holy Eoman Apostolic 
Catholic Church, represented by the most reverend the archbishop 
of Manila, and the most reverend the archbishop of New Orleans, 
apostolic delegate. 

(Conclusions announced by the Commission.) 

In the instructions given by the President of the United States to 
the Secretary of War for the guidance of the United States Philippine 
Commission was the following direction : 

It will be the duty of the Commission to make a thorough investigation into 
the titles of the large tracts of land held or claimed by individuals or by religious 
orders ; into the justice of the claims and complaints made against such land- 
holders by the people of the island, or any part of the people, and to seek by wise 
and peaceable measures a just settlement of the controversies and redress of the 
wrongs which have caused strife and bloodshed in the past. In the perform- 
ance of this duty the Commission is enjoined to see that no injustice is done ; 
to have regard for substantial right and equity, disregarding technicalities as 
far as substantial right permits, and to observe the following rules : 

That the provision of the Treaty of Paris, pledging the United States to the 
protection of all rights of property in the islands, and as well the principle of 
our own Government, which prohibits the taking of private property without due 
process of law, shall not be violated ; that the welfare of the people of the 
islands, which should be a paramount consideration, shall be attained consist- 
ently with this rule of property right; that if it becomes necessary for the 
public interest of the people of the island to dispose of claims to property, which 
the Commission finds to be not lawfully acquired and held, disposition shall be 
made thereof by due legal procedure, in which there shall be full opportunity 
for fair and impartial hearing and judgment ; that if the same public interests 
require the extinguishment of property rights lawfully acquired and held, due 
compensation shall be made out of the public treasury therefor ; that no form of 
religion and no minister of religion shall be forced upon any community or upon 
any citizen of the island ; that upon the other hand no minister of religion shall 
be interfered with or molested in following his calling ; and that the separation 
between state and church shall be real, entire, and absolute. 

Soon after the Commission reached Manila it was consulted by 
General MacArthur, the military governor, as to the proper course 
for him to take on the petition of the rector of the University of St. 
Thomas, asking him to revoke an order made by his predecessor, 
General Otis, in 1899, which forbade the rector of the University of 
St. Thomas to continue to maintain a school of medicine and phar- 
macy in the buildings of the College of San Jose, and to use its name 
and income for that purpose. The order of General Otis had been 
made at the instance of the president and directors of the Philippine 

(105) 



106 

Medical Association, who claimed that the foundation of the College 
of San Jose had been completely under the control and administration 
of the Spanish Government as a public institution, and passed by 
virtue of the treaty of Paris to the United States Government, and 
that though the Spanish Government had permitted the college to be 
administered for it by the Dominican order, the United States Gov- 
ernment, in which there is a complete separation of church and state, 
should maintain the administration of a school, with purposes so en- 
tirely secular as that of the teaching of medicine, free from sectarian 
and monastic influences. General Otis's order did not take away 
from the control of the rector of the university the property of the 
College of San Jose, but merely forbade the opening of the college as 
a school of medicine and pharmacy. The property of the founda- 
tion, therefore, is still in the possession and under the control of the 
rector of the University of St. Thomas, except that he is prevented 
by the terms of the order from opening a college of medicine and 
pharmacy therein. 

The corporation of the College of San Jose owns two large hacien- 
das. The issue here presented involves the question of the control of 
that property. Under the instructions of the President, the Commis- 
sion deemed it its duty to investigate the issue involved and to bring 
it to a legal settlement. It so advised the military governor and sug- 
gested that he delay action upon the petition of the rector of the Uni- 
versity of St. Thomas until the investigation could be had, and that 
meantime the college might be opened under the joint control of rep- 
resentatives to be appointed by each party. Joint control was unsat- 
isfactory to both parties, and the military governor therefore decided 
not to change the status quo under the order of General Otis until the 
Commission should conclude its hearing and express to him its view of 
the proper action to be taken on the petition of the rector of the 
university. The hearing of the case was begun in July and continued 
from time to time until October. Dr. T. H. Pardo de Tavera ap- 
peared as the party complainant, representing the Philippine Medical 
Association and those of the Philippine people interested in secular- 
izing the control of the College of San Jose. The Most Rev. Fr. 
Bernardino Nozaleda de Villa, Archbishop of Manila, and the Most 
Rev. P. L. Chapelle, Archbishop of New Orleans and apostolic dele- 
gate, appeared in behalf of the Holy Apostolic Roman Catholic 
Church and asked that it be substituted as a party to the issue in- 
stead of the rector of the University of St. Thomas, on the ground 
that the rector only represented the church in his control of the col- 
lege. The archbishops were permitted to appear in this representa- 
tive capacity and to defend against the prayer of complainants. 

The pressing engagements of the Commission in other matters pre- 
vented a speedier hearing, and have delayed the announcement of its 
conclusions until now. 

The questions in the case are these : 

Did the Government of the United States, as claimed by the com- 
plainants, acquire by the treaty of Paris the right and power to pro- 
vide for the control and management of the foundation and proper- 
ties of the College of San Jose, as an institution under the secular and 
civil control of Spain in the Philippine Islands, so that the United 
States should now by law give to the college a directory, nonsectarian 



107 

in character, to maintain and conduct it as a school of medicine and 
pharmacy ? Or — as claimed on behalf of the Catholic Church — have 
the foundation and properties of the College of San Jose, under the 
canonical law and the civil law of Spain, always been subject to the 
ultimate control of the church for sectarian charitable purposes — a 
control exercised by the King of Spain only by virtue of a concordat 
between him and the Pope, as head of the Catholic Church. 

It is indispensable to a proper discussion of these questions that the 
history of the College of San Jose, as shown by the evidence and 
documents before us, should be stated. It was agreed between the 
parties that, for the convenience of themselves and the Commission, a 
statement of the facts, made by Lieutenant- Colonel Crowder, military 
secretary, in a report concerning the status of the college, to the mili- 
tary governor, should be taken as accurate, but that it might be 
supplemented by additional documents and evidence to be produced 
by either party. Additional documents have been produced by the 
parties and we do not understand that the authenticity of any of the 
documents adduced on either side has been denied. With the record 
of the case thus fixed, we proceed now to state, as succinctly as may be, 
the history of the College of San Jose. - 

On the 8th of June, 1585, the King of Spain, upon information that 
the fathers of the Society of Jesus had done much good work in 
teaching in the islands, and that their retention and increase was 
desirable, and that they should be assisted by the establishment of 
a college, commanded the governor and the bishop of the islands to 
report to him how the college could be instituted and the necessities 
of the Jesuit Fathers provided for. In 1601, on the 25th day of 
August, the pro visor and vicar-general of the Archbishopric of Manila, 
upon the application of the Jesuit Father, Louis Gomez, granted per- 
mission to the petitioner and his order to found and establish the 
College of San Jose for the purpose of bringing up young people of 
the city of Manila and rearing them according to good manners and 
learning and of creating such ministers of the Holy Gospel as might 
be needed in the land and to perform masses in the college. Upon 
the same day the governor and captain-general of the Philippines in 
the name of the King of Spain granted a similar license to the same 
applicant. How far the Jesuit Fathers were successful in establish- 
ing a college for the purposes mentioned between 1601 and 1608 does 
not appear very clearly. Certain it is that a school was opened called 
San Jose, but there appears to have been no property foundation of 
any kind until after 1605. In the month of March, 1596, Eodriguez 
de Figueroa, then governor of Mindanao, made the following will : 

In the name of God. Amen. Know all whom this will may see that I, Este- 
ban Rodriguez de Figueroa, governor and captain-general of Mindanao and of 
its district, now a resident of the village of Arevalo, legitimate son of Duarte 
Rodriguez de Figueroa and Da. Isabel Gonzales, my parents, formerly residents 
of the city of Jerez de la Frontera, in the Kingdom of Castile, being in good 
bodily health and in my natural understanding and memory, such as pleased 
our Lord to give me, and believing, as I truly and firmly believe, in the Most 
Holy Trinity, Father, Son, and Holy Ghost, three persons, and only one true 
God, who lives and reigns, without beginning and without end. And taking 
as I do the Holy Virgin Mary as my lady and advocate in all my actions, and 
desiring to place my soul in course of salvation, and naturally fearing death, 
I execute, acknowledged by these presents, and order this my last and ultimate 
will, in the manner and form as follows : 



108 

And so that God. our Lord, should not allow any of my said children to die 
before they become of age, competent to make a will, I, as their father and 
legal administrator, am competent to make a will for them in such case, and 
by virtue of said power, I order and command that if the aforementioned hap- 
pens, their mother. Ana de Oseguera, if surviving, inherit the estate of the 
deceased and of both, the third and the remainder of the fifth being devoted to 
what is hereinafter declared, and if said D. Ana de Oseguera and my said 
children, or either of them, die without leaving heirs in the decending line, 
then, in such case, their estate and their legal paternal or maternal portion, 
together with the rents and profits therefrom, shall be devoted to the founda- 
tion of a college in the manner hereinafter stated, the same being done, if said 
Da. Ana de Oseguera survives, with the third and remaining fifth ; in either 
one or the other event, a house must be constructed near the Society of Jesus of 
Manila, sufficient to serve as a college and seminary for boys, where all those 
be admitted who should desire to enter the primary classes of said seminary ; 
I pray and request whoever may be the provincial of said society to furnish such 
boys with sufficient teachers for that purpose, the remaining part of said build- 
ing, not used for that purpose, to be rented for the purpose of maintaining such 
children and boys ; the said father provincial to be the patron and adminis- 
trator of said college, and no one can enter therein without his permission 
and authority ; to visit and to correct and arrange all of its things, to order 
said sale, buy the possession and the building, and to appoint a collecting agent 
and other officials and ministers with the power and authority necessary to such 
ministry, without said college, nor any judge, nor any secular nor ecclesiastical 
administration of justice taking part therein, notwithstanding any pretentions 
that may be advanced. And if any rent remains after payment of maintenance 
for said boys and of clothing for those who are poor, the said patron may dis- 
pose of it at his will for the benefit of said college and of the society or of any 
other pious work, as he may deem best, without at any time asking or taking 
any account therefor from him, for any cause or reason. 

I revoke, annul, and declare as of no value and effect any will, order, or 
codicil which I may heretofore have made, so that they be of no value except 
this one, which I desire to be valid as my last and ultimate will, in the course 
and form which is proper under the law. 

In testimony of which I have executed it and signed it with my name at the 
village of Arevalo on the sixteenth day of the month of March, 1596. 

In 1605, after the death of Governor Figueroa. the event happened 
which fulfilled the condition of the gift of the testator to found a 
college. Part of the funds or property which thus became available 
were in the City of Mexico, and in order to obtain them it became 
necessary to apply to the King of Spain to permit the transmission 
of the annual income from Mexico to the Philippine Islands. An 
application was accordingly made by the head of the Society of Jesus, 
in which the facts were set forth substantially as before stated, and 
the necessary permission was requested. By decree of September 13. 
1608, this permission was granted as necessary to the founding of a 
college and seminary in the city of Manila, where the children of the 
residents of said islands should be educated, and where such a college 
was needed so much for the purposes of study and of creating minis- 
ters of the gospel, of which the applicant, the procurator of the So- 
ciety of Jesus in the Indies, had been designated as patron. On the 
28th day of February, 1610, the vicar-general of the diocese, upon an 
application of the provincial of the Society of Jesus, after reciting 
the will of Figueroa. the appointment of the provincial as patron, 
the establishment of the college, the foundation of twenty scholar- 
ships, renewed and confirmed the license and permission of 1601 to 
Father Gomez to establish the college and celebrate masses therein. 
On July 12 and 27. 1669. King Philip IV made an unconditional 
grant to the college of $8,000, and on July 27 of the same year Queen 
Mariana, of Austria, made a similar grant of $12,000. On the 3d of 



109 

May, 1722, the King of Spain received a petition from the head of 
the Society of Jesus in these islands, stating that the society was ad- 
ministering in the city of Manila " a seminary for grammatical, 
philosophical, and theological students in the name of San Jose, 
founded by Don Esteban Rodriguez de Figueroa," and praying in 
consideration of the good that it had done and on account of the par- 
ticular benefit which would result to the whole of said republic that 
the King receive it within his royal protection, granting it the rights, 
privileges, and preeminences of a royal college without any prejudice 
to his royal treasury, with authority to place his royal coat of arms 
over its doors and other customary places, and to make use of the title 
in documents and letters. The King deemed it proper to grant the 
request, admitted the College of San Jose within his royal protection, 
honoring it with the royal title of ad honorem in case ^it should have 
no patron, upon express condition that it should never cause or pro- 
duce prejudice or embarrassment to the royal treasury by reason of 
the title. He commanded the governor of the Philippine Islands 
and prayed and requested the archbishop of the Metropolitan Church 
of the city of Manila not to place or allow any embarrassment or im- 
pediment whatever to the enjoyment by the College of San Jose, 
administered by the members of the Society of Jesus, to the enjoy- 
ment of the royal title thereby granted and the other privileges in 
respect thereto. 

In 1768, by the pragmatic sanction, the Jesuits were expelled from 
the Philippine Islands, their properties were seized by the Crown, and 
in lieu thereof pensions were allowed to the order. As part of the 
properties, the governor of the islands seized the College of San Jose 
and its estates and treated them in every respect as confiscated to the 
Crown. The college building was turned into barracks. Against this 
confiscation the archbishop protested and petitioned the governor- 
general that, pending the King's action on the protest, the college be 
delivered to him. The petition was granted, and the archbishop took 
possession of the college and converted it into a religious seminary for 
natives. Against this action of the archbishop the court of the audi- 
encia protested to the King, contending that the College of San Jose 
should upon principles of law revert to the status fixed by its founda- 
tion. 

On March 21, 1771, the King acted on the representation of the 
audiencia and the protest of the archbishop. He disapproved the 
seizure and despoliation of the properties of the San Jose College by 
the governor, but he also disapproved the conversion of the college 
into a seminary, made subsequently in common accord by the arch- 
bishop and governor. In the rescript of the King upon the issue 
thus presented, he held that the action of the governor was entirely 
contrary to what was ordered in the instructions for the expulsion of 
the Jesuit priests, and against the right which those who were in the 
college at the time, and those* who should succeed them in the future, 
had legitimately acquired to maintain themselves there ; that the new 
order of things in regard to the want of teachers could not serve as 
an excuse, since priests would not be lacking to be substituted for the 
present, and in time they would become suitable persons for sustain- 
ing this laudable foundation; that the spoliation had been a cause of 
the most serious damage and pernicious consequence, as it was shown 



110 

that the said college was founded with a view to instructing the sons 
of leading Spanish subjects of that city in grammar, philosophy, and 
theology; that twenty scholarships were created in it for that many 
more collegians ; that their instruction was undertaken and the direc- 
tion was intrusted to the expelled priests of the society; that the 
father of the then King had been pleased to receive it under his 
sovereign protection on May 3, 1722, and to decorate it with the title 
of royal ad honorem. provided it should have no other patrons, and 
upon the express condition that it never would or could produce a 
burden or charge of any kind on the royal treasury, and that the said 
Order of the Society of Jesus had no interest in it except the said 
direction and government; that under the orders of 1769 and 1770, 
regarding the seizure of the temporalities of the Jesuits, it was de- 
creed " that no change should be made in the colleges, or the secular 
houses, whose direction and the instruction therein were in their 
charge; that the governor and the archbishop had exceeded their 
authority in erecting a new collegiate seminary in the College of San 
Jose," and as the College of San Jose had nothing in common with 
the expelled priests through their only having had its administration 
and direction, and this having ended with the expulsion, the said gov- 
ernor ought to have appointed an ecclesiast of good standing as rector 
and administrator from those who had been students in the same 
college, as being already instructed in its management, with these 
instructions, to give an account every year without permitting the 
archbishop to meddle in anything pertaining to the college, " as it is 
under my royal protection and therefore totally independent of the 
ecclesiastical ordinary, as are the other obras pias spoken of by the 
trindentine." 

The King accordingly ordered that all things be placed in the 
college in the same state and condition in which they were before the 
change took place. 

At the commencement of the year 1777 the governor appointed as 
rector and administrator of the College Don Ignacio de Salazar, 
Canonical of the Metropolitan Cathedral, who in that year took 
charge of the property of the College of San Jose, and from that time 
down to 1879, the position of rector-administrator of the College of 
San Jose was always intrusted, by appointment of the governor-gen- 
eral, to an ecclesiastic of the cathedral, with the duty of reporting the 
accounts of his administration every three years. The management 
of the college was not successful and the administration of its proper- 
ties was negligent, and possibly in some of its years corrupt. The 
field of secondary education which it had attempted to fill came to be 
occupied by newer and more successful institutions, such as the 
Municipal Atheneum and the College of San Juan de Letram 

Between the years 1860 and 1870, the question of the conversion of 
the College of St. Joseph into a professional school of some charac- 
ter, of arts, agriculture, or medicine, was much discussed, particu- 
larly its conversion into a school of medicine and pharmacy. Finally, 
in 1867, a board consisting of the rectors of the university. Municipal 
Atheneum. and College of St. Joseph, and one representative each of 
the professions of medicine and pharmacy, was convened by royal 
order and charged with the duty of ascertaining the origin and object 
of St. Joseph's College, its revenues and pious charges, and the best 



Ill 

manner of installing therein classes of medicine and pharmacy. Its 
condensed finding is thus reported : 

Result: That there only appears the strict obligation of supporting three 
scholarships with the estate of Tunasan, and one more when the " Mesa de 
Misericordia " (Table of Mercy) may guarantee its expenses. As to the studies 
nothing is said of what kind of faculty they shall be — it is only set forth that 
sons of well-born Spaniards shall be educated in virtue and letters. 

Morales de Setien, rector-administrator in 1869, in submitting his 
report of that year, reaches the same conclusion. He refers to the 
fact that at that time Manila was provided with five colleges dedi- 
cated to secondary instruction, and points to the great advantages 
which would result if one of these colleges could be devoted to teach- 
ing something more adapted to the conditions of the country and the 
wants of its inhabitants. The rector of the University of St. Thomas 
also expressed the opinion that the diversion of the greater part of 
the college's funds to the maintenance of classes of medicine and 
pharmacy was within the provisions of that clause of the will of the 
founder, declaring that " if the said funds, after paying the board of 
said boys and the clothing of those who are poor, should show a 
surplus, the said patron may dispose of the same as he thinks right 
for said college or the company, or in other pious works, as he may 
deem best, without being called to account at any time for any cause 
or reason whatever." 

In short, it was argued that the specific intention of the founder 
had failed, and that his general intention in favor of educational 
charity should be effectuated by the government through a cypres 
application of the funds, or, as the canonical phrase is, by commuta- 
tion. 

In 1870 the Spanish Government adopted the famous decrees con- 
cerning education in the Philippine Islands known as the Moret De- 
crees, by which it was attempted to secularize most of the institutions 
of learning. Among other provisions in these decrees, was one direct- 
ing that the College of San Jose, the College of San Juan de Letran, 
the Ateneo Municipal should be united in one academy for secondary 
and entirely secular education, to be known as the Philippine Insti- 
tute, to be subject to the ultimate control of a superior board of edu- 
cation, which was civil and secular in its character. These decrees 
were never enforced. They were successfully resisted by those in 
control of the College of San Jose and the others as an arbitrary and 
unjust despoliation. 

In 1875, upon the accession to the throne of King Alfonso, new 
decrees were made by which the University of St*- Thomas was reor- 
ganized, though the control of it by the Dominican order was not 
disturbed, and the College of San Jose was in a sense incorporated 
into the university. The history of this is found in Colonel Crowder's 
report, as follows : 

The incorporation of the College of St. Joseph into the university and the 
application of its revenue to the maintenance of the university classes of medi- 
cine and pharmacy were accomplished by articles 2 and 12 of this decree of 1875, 
the former prescribing that " in this university shall be given the necessary 
studies for the following professions : Jurisprudence, canons, medicine, phar- 
macy, and notary," and the latter that " the branches of medicine and pharmacy, 
although constituting an integral part of the university, will be taught in the 
College of St. Joseph, whose revenues, with the deductions of the amounts for 
pious charges, will be devoted to the expenses of these branches. The five-sixths 



112 

part of the fees from the registration of these subjects and half of the fees for 
degrees, titles, and certificates of the alumni will also pertain to the college men- 
tioned. The rest will be applied to the general expenses of the university." 

These articles conferred a positive benefit and were immediately enforced. 
Other articles, the effect of which was to impair, to a degree, at least, the 
Dominican autonomy, were accorded a very different reception, and to these 
attention will now be invited. The first and most important of these latter 
articles is article 14, which reads as follows : 

" The vice-royal patron, upon the recommendation of the rector, shall name a 
director for the College of St. Joseph, confiding to him also the administration 
of its revenues. In lieu of this functionary the senior professor of the branch 
of medicine will perform the duties of director-administrator." 

The rector's first action under this article was the recommendation of Dr. 
Manuel Clemente, director-administrator of the college, who was appointed by 
the governor-general. But in 1876-77 there resulted a large deficit in the rev- 
enues of the college, and a royal order, dated June 5. 1877, was issued by the 
minister of colonies recommending a more careful management of the college 
funds. 

When the governor-general received said royal order he convened a commis- 
sion, and charged it with studying and making recommendations as to the 
proper way of maintaining the faculties of medicine and pharmacy with the 
funds of the college alone if possible. This commission condemned the admin- 
istration of Clemente as unfit and abandoned, and in its report of September 5, 
1877, recommended that the rectorage of the university should immediately take 
charge of the estates, valuables, and all properties and documents of St. Joseph's 
College ; and that regulations for the management of the same be extended. As 
a result, the governor-general, on September 28, 1877, decreed that an adminis- 
trative commission, composed of the rector of the university and the professor of 
pharmacy. Fernando Benitez, should take charge of the college, conferring upon 
them the powers necessary to carry out the complete reorganization of St. 
Joseph's College, such as was provided in the royal order of 1875. This com- 
mission commenced its work in October, 1877, and on July 26, 1878, submitted 
its report, in which it recommended that the office of director-administrator 
should be made two separate offices, the office of director to be filled by the 
rector of the university, to be rated ex officio director of St. Joseph's, and that 
of administrator to be filled by the governor-general upon the recommendation 
of the rector of the university of three names to be taken from the professors of 
medicine and pharmacy. This report was approved by the governor-general in 
his decree of August 1, 1878, in which he directed that the immediate direction 
and government of the college should be hereafter under the charge of the rector 
of the university, and that the administration of said college should continue in 
the hands of Don Fernando Benitez, professor of pharmacy. This decree of the 
governor-general was subsequently approved by royal order of March 24, 1880, 
with the modification that Beaitez, in his post of administrator, should be remov- 
able, and that his successors should be named by the governor-general upon the 
recommendation of the rector of the university of three names, the appointee 
being always a professor of one of the branches of medicine or pharmacy. By 
the governor-general's decree of August 1, 1878, the rector was charged with pre- 
paring regulations concerning the control and management of the college. It 
appears that such regulations were issued by the governor-general on October 15, 
1879 ; that title 2 of said regulations gives to the rector of the university, as ex 
officio director, the control of the properties and finances of the college. 

It has thus happened that article 14 of the decree of 1875, which, although it 
did not direct, certainly permitted the control and management of St. Joseph's 
College to be given into the hands of a layman, has been in effect abrogated by 
subsequent orders of the governor-general, approved at Madrid, which place the 
management and control of the finances in the rector of the university. 

Articles 6 to 10 of the decree of 1875 have shared a similar fate. There has 
never been a competitive examination held either here or at Madrid for vacant 
professorships, and these have been filled by the governor-general upon the rec- 
ommendation of the rector. Regulations to carry the decree of 1875 into effect, 
which were to have been published and remitted to the minister of foreign colo- 
nies with all urgency, have not yet been published, although the rector claims 
that a draft of such regulations was prepared and forwarded in 1876, and a 
second draft in 1890. * * * 

The administration of the college properties is separate from that of the uni- 
versity properties. Two accounts are kept, each with its own funds and dis- 



113 

tinct administration, but both under the same direction, to wit, that of the rector 
of the university. * * * On the whole it seems that the effects of the decree 
of 1875 upon St. Joseph's College were radical in the extreme when we consider 
the independence it enjoyed in its earlier history. Its scholarships, which prior 
to 1870 had been maintained at twenty, were, shortly after this decree went into 
effect, reduced to three and transferred to another institution. The instruction 
formerly given within its walls in " virtue and letters," in accordance with 
alleged requirements of its foundation, gave way, under that decree, to profes- 
sional education in medicine and pharmacy. Its revenues, deducting the insig- 
nificant portion necessary to maintain three scholarships and a few other pious 
charges, were devoted to the maintenance of the faculties of medicine and phar- 
macy. But the administration of the college properties was kept distinct; the 
separate autonomy in this regard remains unimpaired. 

The income from the property in normal times seems to be about 
$20,000 gold and to indicate a foundation of about $500,000 gold. 

ARGUMENTS. 

In the opening arguments for the complainant the ground was 
taken based on the history of the college as recited by one ecclesiastical 
writer, that the college was founded by the royal decree of 1585 and 
that $1,000 a year was devoted from the royal treasury to its support, 
that the gift of Figueroa was merely in support of the royal founda- 
tion, and that contributions were made by the government of the 
islands from time to time to aid the college as a royal college. It was 
said that such a college was wholly free from ecclesiastical control if 
the King desired to make it so and that he had shown his desire to do 
so in the establishment of it as a secular college of medicine and 
pharmacy without any instruction in morals or religion. 

The contention on behalf of the complainant that the college was 
originally of royal foundation by grant of 1,000 pesos annually was 
denied by the prelates appearing for the church, and in the reply of 
the complainant's counsel the commission understood this contention 
not to be insisted on. We come, therefore, to the argument for the 
church, because the issues really presented for decision are more 
sharply drawn by the argument for the church and the reply of 
counsel for the complainant. 

The argument on behalf of the church begins with the premise that 
all ecclesiastical pious works as defined by canonical writers and laws 
are subject to the ultimate control of the church; that the method of 
administering such works was fixed by the decrees of the council of 
Trent, and that by decree of Philip II the canonical law formu- 
lated and declared by this great church council has always been 
recognized as binding in the Kingdom of Spain ; that under such de- 
crees there were two ways in which pious ecclesiastical works were 
administered by the church, one through the control of visitatorial- 
power of the ordinary or bishop of the church and the other through 
the King ; that pious works administered through the King were not 
subject to the control or visits of the bishop except by license of the 
King, but that in controlling such works the King was acting merely 
as the delegated agent or trustee of the church. 

In support of the claim that the foundation of the College of 
San Jose was a pious ecclesiastical work within the operation of the 
decrees of the Council of Trent, references are made to the definitions 
of such works by writers on the canon law in describing the property 



114 

devoted to them as a class of church patrimony. The authors cited 
describe as church patrimony all property destined to succor the poor 
and needy, including in its category hospitals, asylums, colleges for 
the education and training of Christians, religious confraternities, 
and in general institutions and foundations to works of charity and 
religion, and say that two things are necessary and sufficient in order 
that the institutions and foundations be ecclesiastical and that their 
properties pertain to the church; that is to say, that they are by full 
force of right pious ecclesiastical works : First, that they be founded 
with the license and authorhVy of the diocesan bishop, and second, that 
the foundations of the said institutions have been made through 
motives of charity or religion, or what is equivalent, that they have 
been made with the idea of promoting holy religion and providing 
for some moral and material necessity of the founder's fellow-crea- 
tures within the church. The argument distinguishes such founda- 
tions from those which in modern states are not ecclesiastical insti- 
tutions because their founders were not influenced in their action 
by motives of religion or Christian charity, nor did they found them 
in the exercise of Christian charity, but simply through sentiments 
of philanthropy and as acts of social beneficence, with the unmistak- 
able absence of all Christian influence or intention. Attention is 
called to the bull of Pope Alexander VI in 1501, by which the titles 
and first fruits of the Indies, with the duty of propagating the faith 
and endowing the churches and appointing ecclesiastical ministers 
therein and fully to maintain them, were granted to the Kings of 
Spain; and to that of Pope Julius in 1508, by which the universal 
patronage, to wit, that of nominating proper persons for churches, 
cathedrals, monasteries, dignities, colleges, and other ecclesiastical 
benefices and pious places, was granted to the King of Spain ; and to 
the concordat of 1851 between the Pope and King of Spain, by which 
it was agreed that the church should have the right of acquisition by 
any legitimate title whatever, and its proprietorship in all that it 
possesses in the present or should acquire in the future should be 
respected, and that no suppression or fusion should take place without 
the intervention of the authority of the Holy See; and to the cove- 
nant of 1860 between the same parties, by which the Spanish Govern- 
ment recognized anew, in a formal manner, the full and free right of 
the church to acquire, hold, and enjoy the usufruct in ownership 
without limitation or reserve of all kinds of property or values, and 
consequently annulled by this covenant whatever previous covenant 
might be contrary to it, stipulating that the property which in virtue 
of this right should be acquired and possessed in future by the church 
should not be counted in the endowment which had been previously 
assigned to it by the concordat. 

Upon these premises the argument on behalf of the church proceeds 
to point out that the foundation of Figueroa fulfilled one of the two 
requirements of a pious ecclesiastical work, in that it was a gift by^ a 
professing Catholic for the education of Catholics under the adminis- 
tration of a Catholic order, which could do nothing except with per- 
mission of the head of the church, in letters and morals — morals which 
it is conceded by counsel for complainants were Catholic morals — ■ 
and therefore that the foundation was made through motives of char- 
ity and religion, to promote holy religion and provide some moral 
need to the founder's fellow-creatures within the church; that the 



115 

founder's intention to make his gift a pious ecclesiastical work could 
be clearly seen in the will itself, in which he authorizes the patron to 
devote a surplus of funds to any other pious works, thereby emphat- 
ically implying that he regarded the main foundation as pious work. 
Reference is also made to the construction placed upon the purpose of 
the founder in the royal licenses to permit the transmission of funds 
of the trust from Mexico to the Philippines, and in the decree taking 
the college under royal protection, by which the foundation is said to 
be for education of the youth of Manila, in theology among other 
things, and the preparation of young men as ministers of the holy 
religion. It is then contended that the other requirement of the defi- 
nition of a pious ecclesiastical work, to wit, that it be founded with 
the license and authority of the diocesan bishop when fulfilled as to 
the College of San Jose, because, before the Jesuits founded their col- 
lege in 1601, they obtained a license from the representative of the 
Archbishop of Manila to do so, and in 1610, after the college had be- 
come the foundation of Figueroa under his will, the permission 
originally given in 1601 was confirmed to administer the college under 
that foundation, and permission was given to say masses in the school. 

The right of the King to take the college under his protection in 
1722, and to provide an administrator for the college in 1768, is at- 
tributed to the argument for the church to the control given to the 
King of Spain over church property and tithes and first fruits by the 
bull of Pope Alexander VI in 1501, and to the still wider power of 
universal patronage given the same monarch by the bull of Pope 
Julius II in 1508, and it is said that the King was merely acting as 
the pope-appointed royal patron of the college in providing adminis- 
tration for the college after the private patron became incapable 
under the pragmatic sanction, and that the King recognized the eccle- 
siastical character of the foundation in selecting a priest as adminis- 
trator. 

The argument that the Crown of Spain asserted an absolute right to 
control the purpose of the college free from the church by the decrees 
of 1870 and 1875 is met by the contention that the decree of 1870 was 
never enforced, and that of 1875 was only executed so far as to make 
the college a part of the sectarian and church-managed University of 
Saint Thomas, in which the Catholic religion was taught and the 
Dominican rector administered both trusts for the same purpose, to 
wit, the conduct of a university under the Catholic Church, and that 
the diversion of the funds of the College of San Jose to the various 
chairs of medicine and pharmacy embraced in such a university is 
quite in accord with the religious motives of the founder expressed in 
that clause of his will in which he authorized his patron, when the 
original purpose failed or was satisfied, to expend the income in other 
pious works; but that to use the funds for a medical school under 
civil and secular control, completely divorced from the church and 
association with a Catholic university, would be a complete departure 
from the terms of the will and a violation of the intentions of the 
testator. 

Another argument made on behalf of the church rests upon the 
obligation of the Government of the United States to observe as 
sacred contract rights created and secured by the granting and ac- 
ceptance of a charter of the sovereign. It is said that the College of 
San Jose, by what was done, was created and became a body corporate, 



116 

and that the instruments which made up the charter for its existence, 
including the Avill and its recognition by royal decree and license, 
prescribed a clear and well-defined government for the college by 
the head of a religious order, and that any attempt to take the college 
out of ecclesiastical control would be a breach of the contract rights 
acquired by those for whose benefit the trust was to be administered 
from the civil sovereign, whose obligations in this regard passed to 
the United States. Much reliance was put on the decision by the 
Supreme Court of the United States in the well-known case of Wood- 
ward v. Dartmouth College, in which it was held not to be competent 
for the legislature of New Hampshire to change by legislative act 
the mode of choosing the trustees of Dartmouth College and their 
number, as prescribed in a royal charter of the King of England 
granted before the separation of the United States from the mother 
country, because the accepted charter was a contract wmich it was 
forbidden by the Constitution of the United States to a State to 
impair by legislative act. 

The argument for the complainant in reply, assuming, as contended 
for the church, that the real beginning of the College of San Jose as 
a corporate entity and a work of charity began with the vesting of 
the gift under the will of Figueroa, and that the events occurring 
between 1601 and 160S did not change or affect the light in which the 
college should be viewed, and accepting for the sake of the argument 
the definition of a pious ecclesiastical work given in the argument for 
the church, was that the foundation of Figueroa fell short of both 
requirements stated, in that it was a mere act of philanthropy and 
secular charity and was not intended to be a provision for the aid of 
the holy Catholic religion or to be under the control of the church as 
an ecclesiastical pious work; that the delegation of the power of con- 
trol and patronage to the head of the Order of Jesus was a mere 
description of the person of the administrator, and was not intended 
to put the control of the institution under its patron as a subordinate 
of the Holy See; that this was most manifest from the express decla- 
ration of the testator that no ecclesiastical authority should interfere 
in the management of the college and its properties, and that the 
words " other pious works," used in the will, could not, in view of 
this express exclusion of ecclesiastical authority from ultimate con- 
trol, be construed to mean ecclesiastical pious works. The argument, 
as continued, was that Figueroa's foundation failed also to fulfill 
the second requirement of an ecclesiastical pious work, in that it was 
not licensed by the diocesan authority as such. It was said that 
license of the vicar-general of the diocese of 1601 was merely personal 
permission to the provincial of the Jesuits as a priest to conduct a 
college and to celebrate masses, and was not a license of an ecclesias- 
tical pious work, for, as conceded in the argument for the church, the 
college of the Jesuits in 1601 was not an ecclesiastical pious work, for 
it lacked the substance of a foundation and the permanence involved 
in the obligation to continue the college forever. After the founda- 
tion by Figueroa it was argued there was no diocesan license or au- 
thority for the foundation, that the confirmation of the license of 
1601 by a diocesan order of 1610 was a mere repetition of the personal 
license of 1601 to the provincial of the order to do that which without 
the permission of the bishop he could not as a member of his order 
do. The contention further was that as this was a mere private 



117 

charity for public benefit, the application to the King of Spain for 
his protection and for the right to be known as a royal college put it 
under the control of that monarch in the exercise of his royal pre- 
rogative as a sovereign, subject only to the exercise by the provincial 
of the Order of Jesus of his power as patron, and free from any 
interference by the Church of Borne. The expulsion of the Jesuits, it 
is said, deprived the trust of the trustee appointed in the will and 
placed the burden of providing a trustee upon the sovereignty, who 
had become the protector of the college and who was by general law 
the parens patriae and authorized to provide trustees for trusts of this 
character where the person named in the deed or instrument of foun- 
dation to execute the trust had become incapable of continuing to 
execute it. Continuing the argument, it was said that the rescript of 
the King in which he censured the Archbishop of Manila and the gov- 
ernor of the islands for despoiling the properties of the College of 
San Jose and directed that it be returned to its former status under 
the will of Figueroa, the administrator to be appointed by the gover- 
nor, was an assertion by the King of Spain carried into execution of 
his right in the exercise of his roj^al prerogative to control the man- 
agement of the college independently of the archbishop or of the 
Catholic Church. It was said that the direction to the governor to 
appoint some ecclesiastic to control the college was not an admission 
by the King of his obligation to appoint a religious person to the 
control of the college, but onty a conformity to the custom then uni- 
versal of committing educational institutions to the control of mem- 
bers of the clerical profession, who were almost the only persons then 
capable of teaching, and that there is in the rescript itself an asser- 
tion of the right of the King to appoint a secular person, should such 
a person be suitable. This argument is enforced by reference to the 
action of the King in the decree of 1875, by which it was held, ap- 
parently with the consent of the ecclesiastical persons who were 
therein concerned, that the King had authority, by royal order, in 
view of the fact that the purpose of the founder of the college in 
furnishing a school for secondary education in morals and letters had 
become impossible, or rather profitless, because there were other 
schools which much better discharged these functions in Manila, to 
change by decree the purpose to which the funds should be devoted 
and allow them to be used for the conduct and maintenance of a pro- 
fessional school for the education of physicians and pharmacists. It 
is urged that the secular and nonsectarian character of the education 
in which the funds were thus devoted by order of the King is the 
strongest indication: First, that the original donation was regarded 
by those then in authority not as a religious and ecclesiastical charity, 
but only as a philanthropic one; and second, that the effect of the 
decrees was a final decision that the King might, in the exercise of 
prerogative, without consulting the head of the Church of Rome or 
any of his ministers, treat the foundation as one completely within 
his civil control. The argument for the church that all that the 
King of Spain did or attempted to do in the control of the college was 
because of his authority as patron of the college under the Papal bull 
conceding universal patronage in the Indies was met by the conten- 
tion that ecclesiastical patronage was only the power of presenting a 
candidate for ecclesiastical benefices or for offices in a religious col- 
lege, and did not include any control over the ecclesiastical trust 
22380—08 9 



118 

funds or the right to call the official incumbents to an account, and did 
not embrace the right to change the purposes for which the funds 
should be used; that powers of this kind could only be exercised by 
the King as a civil sovereign and parens patriae. 

In reply to the argument for the church based on charter contract 
rights and principles laid down in the Dartmouth College case, the 
answer is made that they have no application to the controversy 
before us, for the reason : First, that it is difficult to find anything in 
the facts here analogous to the charter in that case, and even if the 
will could be so regarded, the provision that the college should be 
managed by the Jesuit provincial had become impossible of execution, 
for the reason that the person described had become incapable and 
the purpose profitless and impracticable. Reference is made to the 
decision of the Supreme Court of the United States in the Mormon 
Church case (136 U. S.), in which it was held that where a trust 
failed because of impossibility of execution the United States, as sov- 
ereign, had power as parens patriae to supply a trustee and to order 
the application of the trust funds to a purpose analogous to that 
originally fixed in the deed of gift or charter. 

Accordingly, here it was urged that as the status of the college at 
the time of the treaty of Paris was that of a foundation under the 
civil control of the sovereign of Spain as parens patriae, the United 
States in the same capacity had the power to make any suitable pro- 
vision for the conduct of the college as a school of medicine under any 
directory it might see fit, and the only suitable directory in a govern- 
ment in which the church was separate from the state was one free 
from ecclesiastic or monastic influence. 

OPIXIOX. 

We have thus stated the arguments pro and con in this case as 
fairly as we could, condensing much and possibly in some instances 
suggesting additional arguments on each side which do not appear in 
the briefs. We are now to state our conclusions : 

The treaty of Paris between Spain and the United States, by which 
these islands were ceded to the latter Government, provides in article 
8, section 2 : 

That the relinquishment or cession, as the case may be, can not in any respect 
impair the property or rights which by law belong to the peaceful possession of 
property of all kinds, of provinces, municipalities, public or private establish- 
ments, ecclesiastical or civil bodies, or any other associations having legal capac- 
ity to acquire and possess property in the aforesaid territories, renounced or 
ceded, or of private individuals, of whatsoever nationality such individuals 
may be. 

The same obligation would rest upon this Commission and the mili- 
tary government under the instructions of the President for the guid- 
ance of the Commission, and the question which must be decided finally 
to settle this controversy is : What was the status of the property and 
foundation of the College of San Jose at the time of the ratification 
of the treaty of Paris, by which the sovereignty over these islands 
was transferred from Spain to the United States, and under which 
the public property situate in these islands and the public civil trusts 
of the Government and Crown of Spain to be performed here were 
transferred to the Government of the United States? 



119 

It is conceivable that between the Crown of Spain and the head of 
the Eoman Catholic Church there might have been a controversy as 
to the right of control and management by the Crown over certain 
property within the territorial jurisdiction of the Kingdom; but if 
the views of the Crown had been carried into effect by the usual 
methods of settling rights according to the laws and customs of the 
existing sovereignty, and possession and control finally established 
thereby, it would seem that, so far as the United States is concerned, 
the controversy must be deemed to have been finally settled and not 
capable of being reopened under the new sovereignty, at least where 
sufficient time has elapsed to constitute the usual period of prescrip- 
tion. For instance, it could hardly be maintained that the pragmatic 
sanction, under which the properties of the Jesuit order in 1768 were 
confiscated and became the property of the Crown of Spain, could 
now be set aside on the ground that this was an arbitrary act and 
deprived the order of its property without due process of law. In 
other words, in a discussion like this, we must have a starting point, 
and that is the status of the property as settled by the lawful civil 
decrees of the government whose sovereignty is transferred by the 
treaty of cession. 

It is difficult to escape the inference drawn by Lieutenant-Colonel 
Crowder from the decrees of 1870 that the Government of Spain 
then supposed it had the right to secularize the College of San Jose, 
but it is also true, as pointed out by the same gentleman in his very 
learned and able report on the subject, that the parts of the decree 
which implied this power were not enforced and were frustrated 
by the resistance of the ecclesiastical authorities in these islands; and 
the same is to be said of the decrees of 1875 and later years, except 
so far as it could be said to be a secularization of the properties and 
foundation of the college to make it a subordinate branch for the 
teaching of secular subjects in a university conducted by the Domini- 
can order of monks under the ultimate authority of the Pope. 

It is apparent from the arguments stated above that among the 
questions which will probably be of importance in the decision of 
the issue of this case is whether under the canon law the foundation 
here made in the will of Figueroa was an ecclesiastical pious work 
subject to the ultimate control of the Church of Rome; another is, 
whether the power exercised by the King over colleges under his 
protection to control them without the intervention of the arch- 
bishop was necessarily dependent upon the papal grant or was exer- 
cised by the Crown as its own without regard to the church. Another 
question not much mooted in the discussion before the Commission 
would probably come up for decision on this issue; and that is, 
whether the right of universal patronage of the Indies exercised by 
the Crown of Spain over such an institution as the College of San 
Jose finds its source in the bulls of the Pope in 1493, If 01, and 1508, 
which have already been referred to, or only finds recognition in those 
bulls of its existence, when in fact its real source was the right of 
discovery and spvereignty. This issue is one which has been the 
subject of profound discussion by learned canonists on the one side, 
upholding the view that the source of it was entirely ecclesiastical 
and papal, while on the other the contention of certain civilians, 
notably the fiscal of the royal audiencia of Cuba, D. Eduardo Alonzo 
y Colmenares, is that the prinicipal and preeminent titles on which 



120 

the Kings of Spain base the universal patronage of the Indies are 
those of discovery and conquest of the dominion and the foundation 
and endowment of the institution in question ; and that the bulls are 
mere recognitions of a title already established. Another is whether, 
even if the United States may act as parens patriae, its provision for 
a trustee and a purpose analogous to that of the founder should not 
be limited to that of a trustee who is a priest of the same church as 
the founder and a purpose nearer to the aims of the Catholic Church 
than a merely secular professional school. 

And doubtless other difficult questions not now considered may arise 
in a final argument of the case. In other words, in order to decide 
the merits of this case, we should probably have to consider and settle 
a nice question of canonical laAv, and investigate and discuss the his- 
torical and legal relations of the Crown of Spain to the head of the 
Catholic Church. Neither of these questions do we feel competent 
now to decide with the materials which are before us and with the 
time at our disposal, nor do we need to do so. We are not a court. 
We are only a legislative body. It is our expressly delegated function 
in just such cases as this to provide a means for the peaceful and just 
decision of the issues arising. Had we been able to decide clearly 
and emphatically that the petitioners had no rights here and that 
their claims were so flimsy as not to merit the assistance of the legis- 
lature in bringing them to adjudication in a court of justice, we might 
have properly dismissed the petition and taken no action thereon ; but 
we are of opinion, all of us, that the contentions of the petitioners 
present serious and difficult questions of law, sufficiently doubtful to 
require that they should be decided by a learned and impartial court 
of competent jurisdiction, and that it is our duty to make legislative 
provision for testing the question. If it be true that the United 
States is either itself the trustee to administer these funds, or occupies 
the relation of parens patriae to them, it becomes its duty to provide 
for their administration by a proper directory, whose first function 
will be to assert, in the name and authority of the United States, their 
right to administer the funds of the college against the adverse claims 
of the person now in charge, who claims to hold under and by virtue 
of the control over the funds by the Catholic Church; and this leg- 
islative action we now propose to take, not thereby intimating an 
opinion upon the merits of the case, but merely by this means setting 
in motion the proper machinery for the ultimate decision by a com- 
petent tribunal. 

The military government, of which we are the legislature, is a pro- 
visional government ; but for all this, pending its existence, it has the 
power to provide for the conservation of public property and the tem- 
porary carrying on of trusts with respect to which the sovereign is 
charged with any duty. 

The only tribunal which we can provide for deciding this cause is 
a tribunal over which, by the instructions of the President, we must 
exercise the power of appointment. Lest, therefore, any opinion 
which we might intimate should be used by either side in the case to 
be argued and decided as authority in that tribunal, we have been 
careful to express no other definitive opinion than that the petitioners 
have presented a case of sufficient dignity and seriousness to warrant 
its full consideration by a court of justice. We think, moreover, 



121 

as the United States occupies the relation of general trustee toward 
the public of the Philippines, in whose behalf the cause is here 
pressed, that it is not stepping beyond the bounds of impartiality for 
the commission to devote from the public funds a reasonable sum for 
the payment of the costs and expenses of the conduct of this litigation 
by the complainant and those whom he represents. He claims to 
represent the general public, and, should his petition be granted and 
his case made, certainly the fund will be administered for the benefit 
of the general public. In the disturbed condition of the country, 
when private contributions are difficult to secure, when four years 
of war have made practically impossible donations for such a purpose 
sufficient to meet its requirements, it is right that from the public 
funds provision be made. We think the sum of $5,000 in money of 
the United States is sufficient for this purpose, and we shall appro- 
priate this amount accordingly to pay the expenses of getting the evi- 
dence, preparing the record, printing the briefs, and as fees for pro- 
fessional services. The fund will be enough in view of the provision 
which we expect to make that the petitioners may call upon the 
Attorney-General to assist in the prosecution of the case. 

It is important that the issue be decided as soon as the proper con- 
sideration of so important a question in the due course of justice can 
be given to it by a competent tribunal. As the United States is prac- 
tically a party to the litigation, we do not think it necessary to have 
resort to the ordinary tribunals of first instance. The case is of such 
signal importance that it may very well be heard by the Supreme 
Court originally, and we shall provide in the act authorizing the 
bringing of the suit the procedure to be followed, so as to secure an 
early hearing on the merits. 

The procedure briefly stated will be as follows : 

The trustees whom we shall appoint will file their declaration or 
petition in the Supreme Court, setting forth the legislation under 
which they act and their appointment, describing the properties of 
the College of San Jose, stating in a summary manner the history of 
the college under which they assert the power of the United States to 
provide*control of the property, and praying a decree of the court 
directing the surrender by the rector of the University of Santo 
Tomas, in charge of the properties of the College of San Jose, to the 
petitioners. To the petition should be made parties, not only the 
rector of the university who has charge of the properties, but also the 
Archbishop of Manila or the Episcopal administrator of the diocese, 
the Apostolic delegate, as the representative of the Catholic Church, 
claiming an interest in the property. A summons shall then issue in 
the usual form, accompanied by a copy of the petition, and shall be 
served upon the rector of the university and the archbishop, and a re- 
turn of said summons shall be made by the officer authorized by the 
court to serve the same within two weeks after it shall issue. 
The summons shall require that the parties defendant shall answer 
the petition within thirty days from the day fixed for the return of 
the service. Upon the filing of the answer in the supreme court, the 
petitioners shall have two w T eeks thereafter to file a reply to new mat- 
ters set up in the ansAver by way of defense. New matters set up by 
way of reply shall be taken as denied without further pleading. 
After the cause shall be thus at issue and the evir^nce taken, the 



122 

supreme court shall give precedence to the hearing of the same and 
shall set it for as early a date as possible consistent with the proper 
preparation of the arguments by the opposing parties. Should the 
court upon final hearing decide that the case of the petitioners is not 
made out upon law and the evidence, it shall dismiss the petition and 
award cost against the petitioners. Should the court, on the other 
hand, decide that the case of the petitioners is made out and that the 
trustees appointed by this commission are entitled to have possession 
and control of the foundation and properties of the College of San 
Jose and that the Catholic Church, either through the rector of the 
university or through the archbishop, has no interest or right of con- 
trol in said property for the purpose of carrying on a school of 
medicine and pharmacy, the court shall enter a decree finding the 
right of control and management to be in the trustees and directing 
the dispossession of the rector of the university of the properties of 
the College of San Jose, and decreeing an accounting against him of 
the rents and profits of the college during his incumbency as admin- 
istrator of the College of San Jose which have not been expended in 
conducting the college or preserving its properties, allowing, however, 
a credit in such accounting of a reasonable sum for counsel fees and 
the expenses for the litigation by him incurred. The costs of the 
case shall not include the counsel fees on either side. 

It is not at all unlikely that before the Congress which was elected 
in November last and which will meet in December next shall finally 
adjourn it will conclude to confer upon the Supreme Court of the 
United States jurisdiction to consider appeals from the supreme court 
of these islands. The present case, involving a construction of the 
Treaty of Paris and the effect upon public trusts of a transfer of sov- 
ereignty from a kingdom in which church and state were united, and 
one might almost say inextricably fused, to one in which church and 
state are kept entirely separate, is of such importance as to make most 
appropriate the submission of the issue to a court of the dignity, 
learning, ability, and commanding jurisdiction of the Supreme Court 
of the United States. This commission has no power to confer such 
jurisdiction upon that court, but it may make a legislative provision 
which shall prevent the decision of the supreme court of these islands 
from being so final in its character as to make it impossible for the 
Congress of the United States, after its rendition, to provide an 
appeal to the United States Supreme Court. The law to be passed 
will, therefore, enact that upon the entering of the decree by the 
supreme court of the islands it shall be immediately carried into 
effect. If against the petitioner, the petition shall be dismissed and 
the costs awarded collected; if against the defendants, and in favor 
of the petitioners, the decree shall be executed by a change of pos- 
session and control of the college and an accounting; but the decree 
shall not become final so as to prevent an appeal, by virtue of a pro- 
vision of the Congress of the United States, to the Supreme Court of 
the United States, or some other tribunal, until the 4th of March, 
1903. 

There remains to be considered the question involved in the petition 
to the governor to rescind the order of General Otis suspending the 
conduct of the college under the rector of the University of St. 
Thomas. In view of the conclusion which we have reached that there 



123 

is much to be said on the merits by both parties, it is clear to a demon- 
stration that there is no reason for disturbing or interfering with the 
possessions of the party whose control and ownership is disputed until 
final decree. Without considering the wisdom or propriety of the 
order of General Otis, in view of the military necessity which was 
then said to be urgent, Ave are very clear that no such military neces- 
sity now exists. There is no evidence before us that the rector of the 
university and others in control of the funds and property are wast- 
ing them, and no reason has been shown for the appointment of a 
receiver. The administration of the property by those selected by 
the Spanish Government may certainly continue for the short time 
pending the hearing of the case without serious detriment to anyone 
concerned. The arbitrary operation of an injunctive order made 
without a judicial hearing should be avoided if possible, especially 
where the issue is a doubtful one, and where judges and lawyers may 
conscientiously differ. Whether the professional education afforded 
under the management of those who are now in possession of the 
properties of the college is as advanced as it should be, or not, it is 
certainly better that the properties should be used for an educational 
purpose than that they should lie idle. We shall recommend to 
the military governor that the injunctive order against the opening of 
the College of San Jose by the rector of the university be rescinded. 

Before closing, we must fix the number and state the names of the 
persons to act as trustees to conduct the litigation now about to be 
begun and to take charge of the college and its estates should the 
decision and decree of the court be in their favor. The first trustee 
will be the gentleman who thus far has borne the burden of the con- 
test for those whom he represents, Dr. T. H. Par do de Tavera. By 
appointing him or any other trustee who has manifested a zeal in the 
cause of the complainant we only do so in order that the question 
shall be energetically pushed to a settlement, and not thereby to indi- 
cate that the trustees represent our views on the issue. As the trus- 
tees, in a sense, will be asserting the validity of the exercise of power 
of the Government of the United States, it seems appropriate to make 
trustee Dr. Charles R. Greenleaf , colonel and chief surgeon, Division 
of the Philippines, in the United States Army. The third trustee 
will be Mr. Leon M. Guerrero; the fourth trustee, Manuel Gomez 
Martinez, M. D., and the fifth Frank S. Bourns, M. D. 

There has been much popular and political interest in the contro- 
versy in which we have now stated our conclusions. The questions 
considered, however, have not had any political color at all. They 
have been purely questions of law and proper legal procedure, and so 
will they be in the court to which they are now sent. The decision of 
the right to control San Jose College can not legitimately be affected 
by the political feeling which one may have for or against the friars. 
It is unfortunate that the public should clothe the settlement of an 
issue purely legal with political significance when it ought not to have 
and does not have one. But, however this may be, those charged 
with settling it can pursue only one path, and that is the path of legal 
right as they see it. 

The secretary will now read the bill, which has passed two readings 
of the commission and which now comes up for a third reading and 
passage : 



124 

[No. 69.] 

AN ACT providing a board of trustees to conduct the College of San Jose as a school of 
medicine and pharmacy, to bring an action against the persons now in possession of the 
property of the college, vesting the supreme court with jurisdiction to determine the con- 
troversy, and appropriating five thousand dollars to pay the expenses of the litigation. 

By authority of the President of the United States, oe it enacted oy the United 
States Philippine Commission tliat — ■ 

Section 1. T. H. Pardo de Tavera, M. D., Charles R. Greenleaf, M. D., colonel 
and chief surgeon of the Division of the Philippines in the United States Army, 
Leon M. Guerrero. Manuel Gomez Martinez, M. D., and Frank S. Bourns, M. D., 
are hereby constituted a board of trustees to take possession of and manage the 
property and estates of the College of San Jose of the city of Manila, to main- 
tain and conduct in the buildings of said college a school of medicine and 
pharmacy for the benefit of the qualified members of the public of the Philippine 
Islands, with power to determine the number of professorial chairs to be estab- 
lished, the number of instructors and demonstrators needed, to appoint pro- 
fessors constituting the faculty, to appoint the necessary instructors and demon- 
strators and other accessory officers and employes, to fix the curriculum, to fix 
reasonable tuition and other fees to be collected from the students, to determine 
the period of study necessary for the conferring of the degrees of doctor of 
medicine and doctor of pharmacy, and to take any other steps needed in the 
creation and maintenance of an efficient school of medicine and pharmacy for 
the Philippine people. 

Sec 2. The board hereby constituted shall organize within fourteen days after 
the passage of this act. shall elect a president and a secretary from its own 
members, and shall keep minutes of its proceedings. 

Sec 3. Whereas there is now in possession of the property and assets of the 
College of San Jose a person who is the rector of the University of Santo 
Tomas, a member of the Dominican Order, claiming to be in possession by 
virtue of the ultimate ownership and right of control of said property and 
estates by the Roman Catholic Church and denying the power of the United 
States Government either to assume control of said property or to make pro- 
vision for the administration of the same, as in section one of this act. the 
board hereby constituted is required, in the discharge of its duties, first, to 
assert its claim to discharge its duties as imposed by this act in the due and 
ordinary legal procedure hereinafter set forth, and to take no steps to secure 
physical possession of the properties and estates of the College of San Jose 
until the issue between them and the rector of the University of Santo Tomas 
and the representatives of the Catholic Church shall have been duly decided by 
the court of competent jurisdiction as hereinafter prescribed. 

Sec 4. Within thirty days after the passage hereof the board herein consti- 
tuted shall file its petition in the supreme court of the islands, setting forth the 
appointment of the board under this act, its powers and duties hereunder, its 
claim of right to the possession of the properties and estates of the College of 
San Jose for the purpose of discharging such duties, the fact that under a 
claim of right the property is held by the rector of the University of Santo 
Tomas, representing the ultimate control of the Roman Catholic Church, setting 
forth succinctly the history of the college and a statement of the facts upon 
which the right of the United States to provide for the administration of the col- 
lege is asserted, and praying that the court shall enter a decree ousting the rector 
of the University of Santo Tomas. or any other minister or representative of the 
Roman Catholic Church from possession of the properties and estates of said 
college, and placing the petitioners in possession thereof so as to enable them to 
dischage the duties imposed upon them by this act. The petition shall make 
party defendant thereto, not only the rector of the University of Santo Tomas, 
but also the archbishop of Manila or the archbishop of New Orleans, Apostolic 
Delegate, who in the absence of the archbishop of Manila from the Philippine 
Islands is the Episcopal administrator of the archiepiscopal province and of the 
bishopric of Manila, and shall require said archbishop as the representative of 
the Roman Catbolic Church to set up its claim of ownership and right to con- 
trol the properties and estates of the College of San Jose. Upon the filing of 
the petition a summons shall issue in the usual form against the rector of the 
University of Santo Tomas and the archbishop of Manila or the Episcopal 
administrator thereof, accompanied by a certified copy of the petition. A re- 
turn of the service of such summons and copy upon the parties defendants shall 
be made within fifteen days after the issuing of the summons by an officer duly 
authorized to make the service. Within thirty days after the day fixed for the 



125 

return of service, the defendants shall file their several answers or a joint answer, 
as they may elect, stating the facts upon which they deny the right and power 
of the United States to provide for the administration of said college and its 
estates and praying a dismissal of the petition at the costs of the petitioners. 
Within fifteen days after the filing of the answer or answers the petitioners 
shall have the right to file a reply to any new facts set up in the answer. New 
averments of the reply shall be considered as denied by the defendants. The 
cause shall then be at issue and no further pleadings shall be filed. After the cause 
shall be at issue, the petitioners shall have thirty days in which to take evidence 
in support of the averments of their petition ; the defendants shall have forty-five 
days in which to take evidence to sustain their answer or answers, and the 
petitioners fifteen days to take any necessary evidence in reply. The evidence 
shall be taken in a manner to be prescribed by the supreme court. Within 
seven days after the cause shall be at issue the parties shall appear before the 
supreme court and stipulate so far as possible what facts may be taken as 
agreed upon by all the parties in interest, so as to save the necessity for proof 
of the same by either party, and this stipulation shall be spread upon the 
records of .the court. When the evidence shall have been submitted, the cause 
shall be given precedence in the supreme court, and shall be heard at as early 
a date as possible : Provided, lioivever, That for good cause shown, the supreme 
court may in its discretion extend any of the periods hereinbefore fixed. 

Sec. 5 The supreme court of the islands, including all its members, as it is 
now or may hereafter be constituted, is hereby given jurisdiction to hear the 
controversy above described and to follow the procedure above defined. After 
reaching a conclusion upon the issues made, it shall proceed to enter its decree. 
If it finds in favor of granting the prayer of the petition, it shall enter a decree 
ousting the defendants from possession of the properties and estates of the 
College of San Jose and awarding costs against the defendants, and requiring 
an accounting by the rector of the University of Santo Tomas of all moneys 
coming into his hands from such properties and estates, allowing him a credit 
for all money expended in the conduct of the college, the preservation of its 
properties and estates, and a credit for the reasonable expenses of defending 
the suit and costs awarded therein. Should the court find the issues in favor 
of the defendants, it shall enter a decree dismissing the petition and awarding 
costs against the petitioners. In no case shall the fees of attorneys, solicitors, 
or advocates of the successful party be included in the costs adjudged against 
the losing party. 

Sec 6. Upon the rendition of the decree by the supreme court in the suit 
hereinabove provided for, the decree shall be immediately executed. If the 
decree is for the petitioners, they shall be at once put in the possession of the 
properties and estates of the College of San Jose, without awaiting the result of 
the accounting in such case to be decreed, which shall then proceed in due 
course; if for the defendants, the petition shall be at once dismissed and an 
execution issue for the collection of the costs: Provided, hoioever. That the 
decree entered shall not be so 'final in its character as to prevent the Congress of 
the United States on or before March 3, 1903, from making provision for an appeal 
from the decree entered by the supreme court under this act to the Supreme 
Court of the United States or any other court thereof. 

Sec.T. The sum of five thousand dollars (#5,000) in money of the United 
States is hereby appropriated from any funds in the insular treasury not other- 
wise appropriated, to pay the costs and expenses of the board of trustees hereby 
appointed in the litigation herein provided for, including reasonable counsel 
fees. The money shall be disbursed by the disbursing officer of the commission 
upon the order of the board, after the money shall have been drawn out of the 
treasury upon the requisition of the disbursing officer in the manner provided 
by law. It shall be the duty of the attorney-general of the supreme court to 
appear as one of the counsel in support of the petition and he shall receive no 
additional compensation therefor. 

Sec 8. The trustees herein appointed shall hold office subject to the will of the 
commission. Should any vacancies exist or occur in the board by reason of 
nonacceptance of the appointment, resignation, or death, the same shall be filled 
by appointment by the commission. 

Sec 9. The public good requiring the speedy enactment of this bill, the pas- 
sage of the same is hereby expedited in accordance with section 2 of "An act 
prescribing the order of procedure by the commission in the enactment of laws " 
passed September 26, 1900. 

Sec 10. This act shall take effect on its passage. 
Enacted January 5, 1901. 



OPINION OF THE ATTORNEY-GENERAL OF THE PHILIPPINE 
ISLANDS AS TO THE HOSPICIO DE SAN JOSE. 



ST. JOSEPH ASYLUM — HISTOEY OF FOUNDATION AND MANAGEMENT PRESENT 

LEGAL STATUS. 

The Asylum of St. Joseph was founded by virtue of a royal order dated Decem- 
ber 27, 1806. The first funds of the asylum were derived from donations 
and bequests. A royal order, dated May 27, 1828, provided that the funds 
of the former battalion of Mestizos should be applied to said asylum. 
These funds being still insufficient, the governor of the islands, on June 25, 
1829, decreed the levying, for the benefit of the asylum, of a tax of 1£ per 
cent on rice exported by foreigners or natives on foreign vessels or for 
foreign ports. 

The superior board of finance, by resolution passed October 29, 1829, assigned 
to the St. Joseph Asylum, out of the funds of Cajas de Comunidad the sum 
of $1,000 per annum. This resolution was approved by a royal order Octo- 
ber 29, 1831. 

On February 5, 1858, the governor-general issued a decree whereby $15,000 were 
appropriated for said asylum. 

On July 13, 1865, the governor-general decreed an increase of the annual assign- 
ment of $15,000, received by the asylum, to $25,000. 

The management of the institution has always been in the hands of a managing 
board under the control of the governor-general. The control and manage- 
ment of the asylum was thus exercised by the Spanish Government until 
the termination of Spanish sovereignty, when the Archbishop of Manila 
assumed it. Held: 

That the St. Joseph Asylum was founded by royal order of the Spanish Govern- 
ment and supported by government funds ; that it was the property of that 
Government and is now the property of the United States Government in 
the Philippines by virtue of the treaty of Paris. 

Department of Justice, March 12, 1902, 
Sirs: As a result of the investigation made by this office in the 
matter of the Asylum of St. Joseph. I have the honor to submit here- 
with a historical narration of the foundation and subsequent trans- 
formations and changes of said institution until the termination of 
Spanish sovereignty in the islands. 

This asylum was founded by virtue of a royal order of December 
27, 1806, for the purpose of providing shelter and means of living 
for unfortunate people who. through sickness or other causes, were 
unable to work. The first funds of the asylum with which its ex- 
penses were met were derived from donations and bequests; these 
funds, by being invested in the business of drafts on America, were 
increased to such an extent that they exceeded the business of the 
establishment. On account of the emancipation of the Spanish- 
American colonies these transactions were discontinued, and the 
funds of the institution were thereby considerably diminished, so 
that it became necessary to reduce the number of its inmates and to 
lease a part of the building. 

(126) 



127 

In view of this distressing situation a royal order, dated May 27, 
1828, was issued, which provided that the funds of the former bat- 
talion of Mestizos should be applied to the use of the St. Joseph 
Asylum. The funds still being insufficient, the governor of the 
islands, on June 25, 1829, decreed the levying, for the benefit of the 
asylum, of a tax of 1J per cent on rice exported by foreigners or 
natives on foreign vessels or for foreign ports. The superior board 
of finance, by a resolution passed October 29, 1829, assigned to the 
St. Joseph Asylum out of the funds of Gajas de Comunidad the sum 
of $1,000 per annum. This resolution was approved by a royal order 
of October 29, 1831. 

On February 5, 1858, in order to meet the expenses consequent upon 
the project for the improvement and enlargement of the institution, 
the governor-general of the islands, D. Fernando Norzagaray, issued 
a decree whereby $15,000 from the Caja Central de Arbitrios remain- 
ing in the general treasury were appropriated for the St. Joseph 
Asylum. This decree was approved by a royal order of September 
12, 1881. 

Upon the motion of the same governor, the project which had ex- 
isted for a long time for enlarging and improving the asylum was 
carried out and a new building was erected at the expense of the 
government. 

On July 13, 1865, the governor-general decreed the increase to 
$25,000 of the annual assignment of $15,000 received by the asylum. 
This decree was ratified March 20, 1888, and approved by the Gov- 
ernment of Spain by a royal order of December 17, 1889. 

The management of the institution has always been in the hands 
of a managing board under the control of the governor-general. 
The chief justice of the supreme court was president ex officio of the 
board. According to the regulations, approved by a royal order of 
January 9, 1861, for the government of the institution, the manage- 
ment and control thereof is vested in a board composed of the 
governor-general, protector; the chief justice of the supreme court, 
president; two dignitaries of the Catholic Church, appointed by the 
protector upon the recommendation of the archbishop, of whom the 
senior, in office or in age, is vice-president; two members of the 
municipal council, appointed likewise by the protector upon the 
recommendation of the president of the council; and six gentlemen of 
good standing in the community and of pious feelings whom the 
protector may deem proper to appoint. By a royal order of October 
6, 1892, it was provided that the presidency of the managing board 
of the asylum should be held by the provincial of one of the four 
religious orders established in the islands in place of the chief justice 
of the supreme court. By virtue of this order the provincial of the 
Order of St. Augustin was appointed president. 

The regimen of the establishment is vested in a director appointed 
by the governor-general upon the recommendation of the managing 
board. 

The control and management of the St. Joseph Asylum was thus 
exercised by the government until the termination of the Spanish 
sovereignty in the islands. Thereupon the Archbishop of Manila 
assumed control, and it was he who appointed the members of the 
present managing board as substitutes for those who held the position 



128 

formerty. He also appointed the present director of the establish- 
ment. 

The present board is composed of the prior of the Order of St. 
Augustin, president; Don Jose Chouza, parochial priest of the 
walled city, vice-president ; Don Trinidad Jurado, Doctor Doneland, 
Don Rafael Eeyes, Don Jose de la Rosa, Don Julian la O, and Don 
Bias Alcuaz, members; Don Manuel Rincon, secretary; Don Emilio 
Borrero, director. 

As a result of the investigation made, I am of the opinion that the 
St. Joseph Asylum, founded by a royal order of the Spanish Govern- 
ment and supported by government funds, was the property of the 
Spanish Government, and is now that of the United States Govern- 
ment in the Philippine Islands by virtue of the treaty of Paris. The 
right of the Government to control and manage the St. Joseph 
Asylum is therefore beyond question. 

Very respectfully, L. K. "Wilfley. 

The United States Philippine Commission. 



OPINION OF THE ATTORNEY-GENERAL OF THE PHILIPPINE 
ISLANDS AS TO THE HOSPITAL OF SAN JUAN DE BIOS. 



HOSPITAL OF SAN JUAN DE DIOS — ADMINISTRATION. 

In 1577 a Franciscan monk, Juan Cleinente, obtained permission from the King of 
Spain to found a hospital, and solicited contributions from the public to carry- 
out the project. It is not known how the institution came into possession of 
the land occupied by it. For the purpose of assisting the Franciscan Friars, 
who it seems were the administrators of the hospital, there was founded, 
about the year 1590, a society called the " Brotherhood of Mercy." The 
hospital was destroyed in 1603 and the land was ceded to the Brotherhood 
of Mercy, who erected a new building. This building was demolished in 
1655 and the property of the hospital was ceded to the Friars of San Juan 
de Dios, who continued in the administration of the hospital until the year 
1866. The buildings of the hospital were destroyed in 1863, and the 
finances of the institution being heavily encumbered, the government 
assumed control of the administration. Held: 

That in its origin the hospital was a public charity, and the Friars of San Juan 
de Dios entered into the administration not as owners, but simply as admin- 
istrators subject to the patronage of the King. 

That the laws governing institutions of charity in force in Spain, if not extended 
to the Philippine Islands by implication, were at all events made applicable 
by the Civil Code of 1889. Under, these laws the royal patronage, including 
administration, extended to the hospital in question. 

That the action of the King in taking over the administration of the hospital in 
1866 was for the purpose of preventing a failure of the purposes of the 
foundation ; protests against this action, if any were to be made, should 
have been made then, and the public, after a use extending over nearly forty 
years, can not in equity be ousted from a possession reared and protected 
by the State. 

That the administration of the Hospital of San Juan de Dios now pertains to 
the United States as the successor of the Spanish Government. 

Department of Justice, May 10, 1902. 

Sir: I have the honor to return the papers in the case of the San 
Juan de Dios Hospital and to submit the following opinion upon the 
question raised : 

The facts in the case are as follows : 

In 1577 a Franciscan monk named Juan Clemente, noted for his 
learning and charity, obtained permission from his superiors and 
license from the King to found a hospital, and immediately solicited 
contributions from the public to carry out his project. It is not 
known how the institution came into possession of the land, there 
being no further record than that Fernandez — 
filled in the large site occupied by the hospital. 

In answer to an inquiry made by the governor-general in 1889 the 
administrator wrote : 

In the archives of the board of administration of pious works no information 
exists in reference to the conditions under which the hospital of San Juan de 
Dios of this capital possesses the land upon which it is situated. 

(129) 



130 

In the absence of title deeds or grants it must be assumed that' the 
land belongs to the State. 

The hospital was destroyed by fire in 1583 and rebuilt with funds 
contributed by the public. In 1590 one Juan Fernandez actively 
associated himself with the management, building a hall at his own 
expense and soliciting alms for its maintenance. For the purpose of 
assisting the Franciscan Friars, who it seems were the administrators, 
there was founded about this time a society called the Brotherhood 
of Mercy, composed of the leading citizens of Manila, and of which 
the ecclesiastical governor was elected president. 

After the second destruction of the hospital, in 1603, the land was 
ceded to the Brotherhood of Mercy, who erected a new building, to 
which they gave the name of " Hospital de la Santa Misericordia." 
This transfer was made with the consent of the King, the Franciscan 
Friars retaining the spiritual control of the establishment. 

The earthquake of 1655 demolished the building, leaving only the 
one hall standing. This unfortunate occurrence completely paralyzed 
the finances of the brotherhood, and finding it impossible to continue 
the administration, it was resolved to cede the hospital to the friars 
of San Juan de Dios. This was done in a public writing dated May 
31, 1656, which was approved by the King in 1659. 

It may be noted here that the possession of the friars of San Juan 
de Dios was subject to the Leyes de Indias (lib. 1, Tit. IV, ley 5, p. 
15), which, among other things, provides: 

It is understood that of the hospitals which they (the friars of San Juan de 
Dios) administer they are not the owners, neither of their incomes nor of their 
contributions, but simply the administrators and assistants. 

In addition to this, the Brotherhood of Mercy reserved the patron- 
age of the hospital, except that exercised by vhe King, and as such 
patrons could visit the institution once a year. 

Again, the hospital was built from alms begged from door to door, 
and the patrimony of the poor sick was so increased that the affairs 
of the institution were very prosperous until the beginning of the 
nineteenth century. 

The friars then became very immoral and corrupt, though as to 
the exact nature of their misconduct we are not informed. The mis- 
management of the trust became so notorious that in 1852 the Crown 
decided to suppress the order. 

The year 1866 saw a complete failure of the trust. The earthquake 
of 1863 totally destroyed the buildings; the possessions of the estate 
were burdened with leonine contracts and immense debts. It was 
then that the Government assumed control of the administration. 

In August, 1866, the governor-general issued an order expelling 
the friars of San Juan de Dios and turning the administration over 
to a board of civilians whose president was the president of the 
audiencia. The order further recited that the hospital should be- 
come a civil institution, and that ecclesiastical visits should cease. 

The real Hospital of San Juan de Dios dates from this time. Had 
the estate been wound up in 1866 the assets would have fallen far 
short of the liabilities. Indeed, it was not certain that the board 
would succeed in reviving it. It was only through the charity of 
the citizens of Manila, by organizing charity bazaars, that sufficient 
money was raised to build the new hospital and to save the estate 
from bankruptcy. 



131 

Until the occupation of Manila by the United States the hospital 
continued to be administered as a civil institution under the direct 
supervision of the governor-general. The only change made in the 
board was in 1891, when, on account of the work devolving upon the 
president of the audiencia, the presidency was transferred to repre- 
sentatives of the four leading religious orders, said representatives 
being named by the governor-general. (Royal order, Oct. 6, 1891.) 
These appointments were civil, and the remainder of the personnel 
of the board remained as it had been. 

We are called upon to determine the nature and the limits of con- 
trol which may be exercised by the government of the Philippine 
Islands over the Hospital of San Juan de Dios. The law upon the 
subject is so intimately connected with the status of the Catholic 
Church in Spain that an examination of the latter is essential. 
Although the relationship between church and state was continually 
varying, yet certain terms used by. writers and legislators expressive 
of the relationship remained unchanged. Prominent among these 
are obra pia and patronato. The retention of these names caused 
much confusion. Spanish writers in analyzing the respective powers 
of church and state have failed to distinguish between the former 
meanings of the terms and their present sense. This I shall show as 
I proceed. 

In the history of Spain the church has passed through three stages, 
sharply defined both in point of time and in the conception which was 
entertained of it. For convenience I shall designate these the ultra- 
montana, the reglista, and the corporate periods. 

The ultramontana period. — This extended from the beginning of 
the national history of Spain — i. e., from the expulsion" of the Moors — 
to about the middle of the sixteenth century. Its legal expression is 
the Siete Partidas. The church was all-powerful, and, in its last 
analysis, was a temporal power dominating the Government of Spain. 
It is therefore natural that we find canonical law imposed upon the 
people as a civil obligation; that the first Partida is nothing more 
than a digest of canon law which Alfonso introduced into Spain to 
obtain the support of the Pope to his pretensions to the Imperial 
throne of Germany. (Schmidt's Civil Law of Spain, p. 68.) 

The church not only possessed houses of worship and monasteries, 
but also all the schools, hospitals, maternity houses, and all charitable 
institutions. These were regarded as ooras pias. All questions re- 
lating to them were determined by ecclesiastical courts. The Parti- 
das, borrowing from the Roman law, declared that religious houses, 
monasteries, and churches are sacred and that hospitals are religious 
property. (Partidas 1, Tit, XII, ley 1.) Further, that the above 
institutions must obey the bishops. (Ibid., ley 2.) Sacred places 
can not be turned from the service of God to the service of man. 
(Ibid., ley 3.) The ground upon which sacred edifices are con- 
structed shall forever remain sacred. (Partidas 3, Tit. XXVIII, 
ley 18.) 

Since the above-named institutions were ooras p'ias, or ecclesias- 
tical property, it follows that the right of patronage in them was 
also an ecclesiastical right. But it does not follow that this right 
was born of ecclesiastical law. The partidas informs us that pat- 
ronage^ means " father of a charge ; " that patronage is gained by 
providing a location for a church, by constructing one, and by in- 



132 

heriting the right. (Partida 1, Tit. XV, ley 1.) It included the 
right of presentation and a place in church processions. 

The partidas do not treat of what is known to-day as the royal 
patronage. It nevertheless existed. Alfonso, in Alcala, promulgated 
a law in 1328 which declares that according to ancient custom in 
Spain the Kings of Castile must approve the elections of bishops 
and prelates, because the Kings are the patrons of the chilrches, and 
that said bishops and prelates, before taking possession, must do 
reverence to the King. Jovellanes points out that the right had been 
established in Leon, Castile, Toledo, and Seville from very early 
times, and that the partidas, instead of preserving these, merely tran- 
scribes the ultramontana maxims of Braeiano. (3 Alcubilla Dic- 
cionario de Administracion, 814.) 

Charitable institutions, therefore, during this period occupied sub- 
stantially the same position as churches and were governed inde- 
pendently of the civil authority. 

The royal patronage, if it existed at all, must have been ecclesi- 
astical, since by law the control of these institutions was vested in the 
Pope. 

The source from which the patronage was derived, whether civil 
or ecclesiastical, was not determined, the power of the church being 
so great as to silence discussion of it. In a word, the temporal power 
was spiritualized. 

The Eegalistas period extended from the time of the council of 
Trent to the French Revolution. Ultramontanian theories could not 
be otherwise than obnoxious to Spaniards. Jovellanes relates that 
the Cortes of Valladolid in 1345, of Guadalajara in 1390, of Valla- 
dolid in 1523, of Seville in 1532, and of Madrid in 1534 opposed the 
laws by which the church was enabled to control so vast a property. 
(3 Alcubilla Diccionario de Administracion, 814.) 

In 1480 Fernando and Isabel scored their predecessors who had 
given away their prerogatives, and reclaimed them with insistence. 
(Novisima Recopilacion, lib. Tit. XVII, ley 5.) 

Carlos I of Toledo in 1525 claimed the patronage as an immemorial 
prerogative. (Ibid., le}' 6.) 

The real source of the difficulty was but vaguely understood. The 
church figured not only as an exclusively religious institution, but it 
was also political and administrative. As a political institution it 
occupied a seat in the Cortes. In its administrative capacity it cre- 
ated universities, schools, and libraries. (Report of Minister of Jus- 
tice, 2 Alcubilla Diccionario de Administracion, 882.) 

Instead of separating what was religious property from civil; 
instead of confining the church to its proper sphere and converting 
universities, schools, and hospitals into civil institutions, the Regal- 
istas attacked the problem from another side. The properties of the 
church were still termed obras pias, or piezas ecclesiasticas, and were 
perhaps regarded as sacred, and therefore within the sole jurisdic- 
tion of the church. But the church itself came to be regarded as a ' 
political or civil institution, and its chief, so far as the management oi 
its temporalities was concerned, and even intrenching upon its spir- 
itual administration, was the King of Spain. 

The meaning of patronage became very much broadened. The 
Crown, in governing the church, and, through it, the obras pias, did it 



133 

as royal patron. As patronage originally meant only the power of 
presentment to benefices this extension of meaning was necessary. 
We see the word " protector " used in the law, and the phrase " patron 
or protector." A flood of literature spread over the country having 
for its object the determination of whether the patronage belonged 
to the King by virtue of endowing the obras pias, and therefore was a 
civil right, or whether it was a concession from the Pope and the 
King was merely a papal delegate. 

The concordat of 1737 left the question of patronage open. From 
1737 to 1753 each side argued its position with heat. Another ques- 
tion arose. The King claimed that not only did the patronage be- 
long to him, but that all questions relating to patronage could be de- 
termined only by his council acting as a court. 

The concordat of 1753 recognized the King's title to the patronage, 
but declared that he could not interfere in purely spiritual matters. 

On September 6, 1770, the King and the council promulgated an 
order for the preservation of the prerogatives of the Crown and the 
nation in matters taught in the universities. This law was the result 
of an attack made by Miguel de Ochoa, of the University of Madrid, 
upon the civil authority. The document was turned over to the bar 
association for answer, and their reply is incorporated in the law. 
Extracts from the report follow : 

How is the origin of the patronage of the churches in the temporal power? 
Thus noted authorities have argued, and with reason. (35 Revista de Legis- 
lation y Jurisprudencia, p. 82.) 

In order to prevent confusion it is necessary to divide ecclesiastical causes 
Into two classes. The first is that in which the King only tries to preserve the 
state from insults and .innovations which disturb the peace. In this are included 
all forceful measures, such as the examination of bulls, laws of discipline, those 
of new tithes, the special protection over religious and ecclesiastical associations 
of the Kingdom, the expulsion of ecclesiastics, etc. This essentially constitutes 
sovereignty. We conclude this prerogative is a necessary defense of the tem- 
poral state, and does not emanate from the church. (Ibid., 107.) 

The second class consists of those rights which, being now prerogatives, owe 
their origin to a generous but most just reward of the church, such as tercias, 
diezmos, patronatos. It is a maxim of law and natural reasoning that the 
author of a donation can qualify it with restraining conditions, or can amplify 
it, and as it has been an undeniable practice of the King to exercise jurisdiction 
in these cases, it appears not repugnant to say that said jurisdiction came from 
the same source as the donation itself. 

Diezmos, tercias, patronato, and other rights coming from the church at the 
moment they passed to the Crown became profane, because what is called spir- 
itual in these rights is an intrinsic quality arising from the end which they 
accomplish. Being profane, the royal jurisdiction, which essentially embraces 
all the temporal, necessarily includes it. (Ibid., 109.) 

We prohibit from now on instruction in the universities in question directed 
against the royal authority and prerogatives. For this purpose the university 
will note the contents of the report of the bar association. (Ibid., 128.) 

The corporation period extends from the French Revolution to the 
present day. The report of the minister of justice admirably de- 
scribes the reasons for the change : 

The great principles proclaimed by the French constitutional assembly of 
1789, and later on accepted enthusiastically by other modern nations, destroyed 
the foundations of the old states by showing the attributes which correspond to 
each one of the great social institutions. The civil power had to claim its 
natural attributes, which, in part, had been exercised until then by the church, 
and the latter in consequence of this was obliged to renounce the privileges which 
it had acquired, in this way losing its character as a political and administra- 

22380—08 10 



134 

tive institution. Its personality under these two aspects having disappeared, 
it no longer required the great property which it had employed to realize the 
ends which from this time on came under the jurisdiction of the state. (Report 
of minister of justice, 2 Alcubilla Diccionario de Administracion, p. 882.) 

Again : 

Laical institutions and public beneficences have ceased to be ecclesiastical 
functions and are now covered by civil funds ; therefore the church does not 
need property for this object. These institutions of charity had been taken 
away from the church, and the latter was never indemnified for the expropria- 
tion, on the ground that " the nation, therefore, owes it an indemnification 
equal to the value of the property necessary for these (religious) purposes, but 
not for the remainder of its patrimony, which it devoted to political and admin- 
istrative purposes. It would not be just that the nation should burden itself 
doubly for the same expenses." (Ibid., p. 883.) 

In this era leading up to the definitive provisions of the Civil Code 
of 1889 were enacted laws of beneficencia and desamortizacion. 
The latter separated the church from a great portion of its property 
and the former organized that part of it which was devoted to 
charity under a new theory. Instead of being divided into ecclesi- 
astical anl laical institutions, they became public and private. No 
distinction was made between those owned by the church and other 
corporations. They were still called obras pias, but not piezas eccle- 
siastical, the latter term simply meaning propert}- owned by the 
church as a corporation. 

A reference to Spanish law will sustain this position. 

The first decisive blow was struck in 1820 by the law of mortmain. 
It provides: 

Neither churches, monasteries, convents, nor any ecclesiastical associations 
whatsoever, whether secular or regular, hospitals, orphans' homes, houses of 
charity and instruction brotherhoods, and other establishments, whether ecclesi- 
astical or laical, or known under the name of manos muertas, shall from this 
day be allowed to acquire any property or estates in any province of the mon- 
archy, either by will or by donation, purchase, transfer, mortagage, pledge, or 
by any other title whatsoever. 

Previously (September 19, 1798) Charles IV decreed that all es- 
tates belonging to hospitals, etc., should be sold. 

In 1835 the law- of disamortization declared the law of 1820 to 
be in full force and effect. Upon the heels of this law came the law 
of charity (1822) providing for the new order of things. It pro- 
vided that the funds of all foundations, obras pias, or ecclesiastical, 
whatever their origin, should be reduced to one class; that is, that 
of institutions for relieving necessities named in the law; further, 
that all hospitals, etc.. shall be under the direction and superintend- 
ence of the municipal councils; that all eleemosynary institutions, 
of whatever class or denomination, be included in the law, and that 
those not specifically mentioned be suppressed; that the ancient cus- 
tom of electing nobles or ecclesiastics only to the board of adminis- 
tration be discontinued. 

The law of 1811 declared that all property of the secular clergy, 
whatever its origin, should become property of the nation; only those 
devoted to public beneficence are excepted. 

In 1815 arose the question whether municipal boards had the power 
to intervene in the accounts of ecclesiastical foundations. The Queen 
decreed that the superior administrative authority corresponded to 
the protectorate of all establishments, including those of collective 



135 

interests. This shows that the obras pias belonging to ecclesiastics 
were treated as others, the only question being whether the institu- 
tion was public or private. 

In 1845 the property of the secular clergy not sold was given back. 

The law of 1849 declared all charitable institutions public except 
those supported exclusively out of private funds, provided they ac- 
complish the object of their foundation. 

Various other laws of mortmain were passed which incensed the 
clergy. In 1859 an agreement was reached between the Pope and the 
Queen. It provided that in the future there should be no sale, ex- 
change, or confiscation of church lands without the consent of the 
Holy See ; that certain lands were to be sold and the proceeds invested 
in public securities; that the church shall have the right to acquire 
property and that their right shall be solemnly respected, and there- 
fore the old and new ecclesiastical foundations can not be suppressed 
without the authority of the Holy See ; further, that those who have 
bought ecclesiastical property under the civil laws, and their succes- 
sors, should not be molested by the Pope; that all the remaining 
property provided for in the agreement belonging to ecclesiastical 
persons or things should be directed and administered according to 
the discipline of the church. 

The construction of this law is clearly indicated by later acts. 
The King decreed that all monasteries, convents, congregations, and 
other religious houses of both sexes founded in the Peninsula and ad- 
jacent islands since July 29, 1837, be suppressed and that their prop- 
erty should become the property of the state. Exceptions were made 
of the Sisters of Charity, the escuelas pias, and several other so- 
cieties dedicated to charity and instruction. "As is seen," says 
Scaevola, " the church in general has the power to acquire and to 
possess property of any class, but not so the religious communities." 
(1 Scaevola Codigo Civil, p. 343.) 

Still more strikingly does the civil code evidence the theory that 
property rights come from the sovereign as the result of the statutes 
of mortmain. I quote again from Scaevola's Commentaries on the 
Civil Code: 

Sec. 35. The following are judicial persons : First. Corporations, associations, 
and foundations of public interest recognized by law. 

Comments. * * * Those entities are called corporations in which there 
exists an equilibrium among the members ; those are associations in which the 
individual interest predominates over the collective interest; those are founda- 
tions in which the individual interests completely disappear, and, on the 
contrary, the beneficiaries absorb it entirely ; for example, a hospital, a school. 
(1 Scaevola, Codigo Civil, p. 316.) 

Sec. 38. Juridical persons may acquire and possess property of all classes and 
also contract obligations, institute criminal or civil action in conformity with 
the laws and rules of their institution. The church will be guided in this regard 
by what has been agreed between both powers, and the establishments of in- 
struction and charity by what the special laws provide. 

Taking into consideration these words, it appears that in order to determine 
the capacity of the divers collective persons to whom we refer, it ought to bo 
sufficient to examine the law, and yet it is not so. Besides the particular laws 
which govern the life of the divers entities there exist others of a general 
character whose object is rather political than civil, which it is necessary to 
keep in mind — the Statutes of Disentail and Disamortization. (1 Scaevola, 
Codigo Civil, p. 319.) 

It remains only to call attention to the various acts relating to 
charities. Time and again the Government asserted its protectorate 



136 

over eleemosynary institutions. (See Koyal order, Mar. 25, 1846; 
Sept. 28, 1846; the law of June 20, 1849. art. 11, par. 5; regulations 
of May 14, 1852, tit. 2, art. 29.) 

The royal order of October 12, 1860, declares that institutions of 
beneficence belonging to brotherhoods, etc., -are classed as private. 

The dean of the Holy Cathedral of Seville requested a decision as 
to whether the patronatos which he administered came within the law 
of the protectorate. The Government replied, expressing its displeas- 
ure at the petition as tending to deny the right of inspection and 
supreme protectorate of the Government over patrons and adminis- 
trators of establishments of charity, foundations of a charitable 
character, and obras pias. (Order, Aug. 23, 1869.) 

The question arose in 1871 as to whether a foundation for redemp- 
tion of cajDtives and for endowing those who wished to take orders 
came under the laws of beneficencia. The Government says that the 
word " beneficencia," derived from " benefacere," indicates an insti- 
tution of charity, whatever be the means employed to succor the 
unfortunate. (Royal order, Apr. 20. 1871.) 

An important act is that of April 27, 1875. Some of its leading 
provisions are : 

Akt. 3. Charitable institutions denominated " general," those of patronage of 
the Government or its delegates and agents, shall be entrusted to a board of 
patrons. 

Tit. 1, Art. 1. Those establishments belong to beneficencia general which are 
classified under this character in the manner provided by law. 

Art. 2. Private beneficence comprehends all . those institutions created and 
endowed from private funds and whose patronage and administrators are regu- 
lated by their respective founders, or in 'their name, or confided to corporations, 
authorities, or determined persons. 

Art. 3. Every private institution will acquire the character of public if 
entrusted by foundation to a patron de officio and the office has been suppressed. 

:je H* * % ♦ # * 

Art. 5. Institutions of charity are establishments or permanent associations 
devoted to gratuitious satisfaction of intellectual or physical necessities, as 
maternity houses, schools, colleges, hospitals, and other analogous institutions, 
and also foundations without permanent character, known as patronatos, 
memorias, legados, obras y casas pias. * * * 

Art. 7. To the Government pertains the patronage of all charitable institutions 
which affect undetermined collectivities and which therefore need it. 

Art. 8. * * * In pubic establishments the action of the Government will 
have no other limits than imposed by law. 

H* H* H* *H % % % 

Art. 10. The Government reserves the right to approve the constitutions and 
regulations of foundations of its patronage, etc. 

Art. 11. The minister of state shall have power to create, suppress founda- 
tions, modify them in harmony with new social conditions, etc. 

Sections 31 and 32 relate to the pow T er of the board of patrons to 
whom the Government confides the administration of establishments 
which by law or foundation are of its patronage. The board can 
make suitable laws of management (to be approved by the Govern- 
ment), prescribe salaries of employees, have the direction and admin- 
istration of establishments complying with the prescriptions of law 
and foundation, etc. 

Section 32 is devoted to the protectorate exercised by the Govern- 
ment over private patrons. 



137 

The result of this legislation, in a word, was that proprietary 
rights, instead of being determined by the character of the prop- 
erty, were determined by ordinary titles of civil law. An obra pia 
belonged to the individual who had title to it and was not under 
control of the church on account of any intrinsic quality. In the 
fifteenth century obra pia meant substantially church property, but 
in the nineteenth it means any work devoted to either religion or 
charity. This is clearly deduced from the laws quoted. 

Patronage then resolves itself. If of ecclesiastical property, it may 
be ecclesiastical, but if of temporal, it must be temporal. The law 
of 1855 shows that Government patronage of charitable institutions 
includes administration and that public charities are of Government 
patronage; while of private charities of private patronage the Gov- 
ernment exercises a supervision or protectorate which corresponds 
exactly to our concept of parens patrice. 

The questions arise as to what powers the Government would have 
over a hospital owned by the church. The church, according to the 
civil code, should be governed by what has been agreed between both 
powers. But this agreement is merely to the effect that the church 
shall be respected in its property rights. It does not mean that its 
hospitals would not come under the general laws of charities. An 
analogous case would be that of a factory owned by the church and 
being subject to the general factory laws- — for example, of child 
labor. Otherwise, the church could place at naught many essential 
laws. That this was the attitude of the Government of Spain is 
apparent from the decision in the case of the dean of the Cathedral 
of Seville, supra. 

Nor would the patronage of such a hospital be an ecclesiastical 
patronage. The latter term, as defined by the council of Trent, 
relates merely to presentments, but the law of 1875 in unmistakable 
terms shows that the Government patronage is of protectorship as 
well as of administration, the latter being delegated in order to 
allow a free exercise of the former. In exercising this protectorship 
the Government has sometimes signed itself as patron and at others 
as protector. 

The protectorate is the superintendence and tutelage which the Government 
exercises— scrutinizing the acts of the patrons, taking care that the will of the 
founders be accomplished, and interpreting and supplying it in necessary cases. 
The Government, besides exercising the general functions of the protectorate, 
has also the special ones of the patronage in those establishments which it 
has founded or which has been conferred upon it by private individuals or with 
which it is charged by reason of the foundation being bereft of representation. 
In such cases it gives the patronage in charge of special committees in order to 
make free the power which it reserves to itself over these committees. (De- 
recho Administrative Santa Maria, 403.) 

That the protectorship is a temporal power needs no defense, it 
being one of these prerogatives without which there can be no sover- 
eignty. Under the civil code the religious corporations are sepa- 
rated from the church. They are not within the provision of the 
concordats, as is proved by the confiscation of much of their property 
in 1868. If they own hospitals, it is simply as any other private 
corporation, and upon their dissolution or suppression the property 
becomes property of public beneficence and does not, according to 
the laws of charity, pass to the church. The supreme court of Spain 



138 

decided that an estate left in charge of prelates who were its patrons 
and administrators was a private institution of beneficence, the said 
patrons not having been suppressed. (Gaceta Oficial, 1866, p. 24.) 

We come now to the discussion of the application of the above 
jurisprudence to the Philippines. It is provided by the laws of the 
Indies that in cases where there is no law on the subject in the Phil- 
ippines the laws of Castile must be observed. (Recopilacion de 
Indias, book 2, Tit. I, leyes 1. 2.) 

The declaration of the King of Spain in regard to the royal 
patronage of the Indies, found in the laws of the Indies, which pro- 
vides that the patronage of the King shall extend over all hospitals 
built in the Philippines, was promulgated during what we have 
termed the period of the regalistas. It will be remembered that at 
this time charitable institutions were regarded as religious places 
and their administration was intrusted to the clergy, but that the 
Crown specifically declared that the patronage was a civil preroga- 
tive, and that virtually the church was nothing more than a part of 
the administrative machinery of the state. In spite of the fact that 
the laws of mortmain were not extended to the Philippines, and it 
was so declared, yet we can not conceive how the theory of charity 
and charitable institutions which had undergone such an immense 
change in Spain could not have become affected as applied to the 
Philippines. That the influence of the corporation period was potent 
in the Philippines may be gathered from a reference to the works of 
San Pedro, which classify all the hospitals in the Philippines under 
the head of teneflcencia. In 1880 the governor-general appointed a 
committee on charity, consisting of the charitably disposed women of 
Manila, for the purpose of collecting funds especially for the San 
Juan de Dios Hospital, and for all other institutions of charity. All 
doubts, however, are resolved by the civil code of 1889. Its provision 
that institutions of charity shall be governed by what the special 
laws upon the subject provide of itself extends all the laws of charity 
of Spain to the island. If it does not, the meaning of the said section 
would not be clear ; in fact, it would have no meaning at all. Scae- 
vola, quoted above, distinctly makes this statement: 

On no ether theory can we account for the legislation, especially with refer- 
ence to the hospital in question, of the last forty years. 

Specifically applying these laws to the Hospital of San Juan de 
Dios. I conclude that during the sixteenth and seventeenth centuries 
it was nothing more than a public charity, administered by the clergy, 
because customarily all charities were so administered.. It was un- 
doubtedly termed obva pia, and still is classed as such. I have 
shown, however, that this classification in no wise determines pro- 
prietary rights. The Laws of the Indies (book 1, Title IV, law 5, par. 
15), quoted above, conclusively show that the friars of San Juan de 
Dios entered into the administration of the hospital not as owners 
but simply as administrators. The order of 1866 was therefore not 
an exercise of arbitrary power. The laws of charity contained many 
provisions by which private institutions (if this can be considered 
as a private institution) will acquire the character of public institu- 
tions, among them being a failure of the trust, or a failure of admin- 
istration, or a lack of funds. In 1866 there really was no hospital, 
the buildings having been destroyed and the properties of the friars 



139 

heavily mortgaged. The estates were not sufficient to cover the in- 
debtedness of the foundation. It was not only just, but necessary, 
that the King should take over the administration of the hospital in 
order to accomplish the will of the founder. The matter may be 
treated as res adjudicata. Protests, if any were to be made, should 
have been made in 1866. The public, after a use extending over 
nearly forty years, can not in equity or good conscience be ousted from 
a possession reared and protected by the state, even though the stand 
taken by the King was unjust; for it is evident that the injustice of 
such a course would be far greater than would have been the latter. 

The action of the King effectually disposes of any plea on the part 
of the church that the institution was an ecclesiastical oora pia, for 
it is impossible to go behind the King's order, and whatever may have 
been the nature of the foundation before 1866 there can be no doubt 
as to the intention of the King in the order quoted. The document is 
also valuable in that it is an interpretation by the highest court of the 
land of the doctrine of patronage. It proves that the deductions 
which we have made from the general legislation of Spain that' the 
patronage, as applied to hospitals, whatever it may have meant two 
centuries ago, to-day means nothing more than protectorship and ad- 
ministration, is correct. Having declared the hospital to be civil, the 
monarch signed all acts relating to it as patron, thereby showing that 
he considered the patronage to be civil. In 1874 the hospital is specifi- 
cally denominated the Civil Hospital of San Juan de Dios, showing 
that the hitherto signed acts as patron did not, in the mind of the 
sovereign, change the character of the institution. 
Further proof is found in the royal order of 1883 : 
The patronage extends to everything that is not purely spiritual. 

In 1889 General Weyler, then governor-general of the Philippines, 
in a general order relating to the management of hospitals, declared 
the Government to be the patron or protector of charitable institu- 
tions. The concordat of 1753 and those following, recognized the 
protectorship as being a strictly temporal prerogative of the King, 
so that if the patronage as used in the Philippines was a protectorate, 
it could possess nothing of the spiritual and could not, therefore, be 
derived from the Pope. The fact is that the action of the King was 
analogous to that taken by the United States in the Mormon Church 
case (136 U. S., 1) and was, whatever the name by which it was 
called, purely an act in the exercise of the prerogative of parens 
patrice. 

The court will look at the nature of the acts to determine the pre- 
rogatives under which they were exercised, and not the names under 
which action was taken. 

I conclude that the hospital is a foundation, as known under the 
civil code, and that by reason of the laws of charity having been 
extended by implication to the Philippines, and also specifically by 
the said code, it is a public institution of charity, and that the right 
of administration resides in the Government, which should take 
possession of the same, resorting in case of necessity to the courts to 
do so. 

Very respectfully, 

L. R. WlLFLEY. 

The Civil Governor. 



OPINION OF THE SOLICITOH-GENE&AL OF THE PHILIPPINE 
ISLANDS AS TO THE HOSPITAL OF SAN JUAN BE BIOS. 



HOSPITAL OF SAN JUAN DE DIOS ADMINISTRATION. 

Owing both to the character of its foundation and the special provisions of the 
laws of the Indies, the Hospital of San Juan de Dios has never been the 
particular property of the persons having charge of it ; consequently it 
can not now be contended that it is the property of the Catholic Church, 
notwithstanding the ecclesiastical character of the societies that adminis- 
•tered it. 

The laws of the Indies provided for the supervision of the hospital in question, 
as well as of all other hospitals in the Indian possessions, by the officers 
of the Government. 

The authority to provide for such supervision was not delegated by the church, 
but existed independently in the Government of its own right. 

In the exercise of this authority, to prevent a failure of the purposes of the 
foundation, the Government in 1866 took over the administration of the 
Hospital of San Juan de Dios and made it in all respects a civil institution. 

The administration of the Hospital of San Juan de Dios now pertains to the 
United States as the successor of the Spanish Government. 

Department of Justice, May 10, 1902. 

Sir : By direction of the Attorney-General, I have the honor to ad- 
dress this communication to you with the object of submitting some 
observations concerning the opinion rendered by him in regard to 
the Hospital of San Juan de Dios. 

I concur in the opinion that the Hospital of San Juan de Dios is 
a corporation or body with legal existence, and that it has the stand- 
ing of a juridical person in accordance with the terms of the Civil 
Code; and that the matter of providing for the administration of its 
affairs pertains to the Government of the United States in these 
islands, and not to the Eoman Catholic Church. 

The opinion of the Attorney- General proceeds from the historical 
standpoint, from a consideration of the successive transformations 
in the relations of the Catholic Church and the Spanish Administra- 
tion. I propose to approach the question more from the legal point 
of view. 

The history of the hospital demonstrates that its founder, the lay 
brother of the Franciscan Order, Juan Clemente, did not endeavor 
to stamp the institution as private property. He tried to found an 
establishment for the benefit of humanity, without any personal 
motives or any consideration of the interest of the corporation to 
which it pertained, and without any intention of acquiring control 
over the hospital, either generally or as a member of the corporation. 
He endeavored to establish an institution with its own proper exist- 
ence and resources. The donations which were made to the hospital, 
the principal source of its revenues, were not made to the Father Juan 

(140) 



141 

Clemente, nor to the order of San Francisco; they were made to 
the hospital for the purposes to which it was dedicated. Neither 
Father Juan Fernandez, also a Franciscan, who continued the work 
of his religious brother, nor the brotherhood of Santa Misericordia, 
which collaborated in sustaining the hospital and which later took 
charge of it, nor the priests of San Juan de Dios, to whom said 
brotherhood delivered the Hospital of San Juan de Dios, would be 
able to call themselves owners of the hospital. 

It therefore remains settled that the Hospital of San Juan.de Dios, 
from the date of its foundation until it passed into the hands of the 
priests of San Juan de Dios, was a foundation with proper existence, 
established for the benefit of the sick, and was not the particular 
property of the persons who took charge of it, and consequently was 
not the property of the Catholic Chifrch, notwithstanding the eccle- 
siastical character of the Franciscan priests and those of San Juan 
de Dios. The Fathers of San Francisco, the Brotherhood of Santa 
Misericordia, and the priests of San Juan de Dios did not, in the 
opinion of the special patrons of the hospital, exercise more than the 
administration thereof. 

In endeavoring to study this question we must observe that the 
character of the hospital was both civil and ecclesiastical. This was 
due to the bonds which united so intimately the church and state, 
not only in Spain but also in the colonies, so that the church exer- 
cised civil functions and the state interested itself in matters of a 
purely ecclesiastical character. 

In accordance, nevertheless, with the provisions of the laws of the 
Indies relative to hospitals, the Government has the supreme author- 
ity and right of superintendence over the hosiptal, the exercise of 
which authority and superintendence did not have to be delegated by 
the church, the power of the sovereign sufficing for this, for the rea- 
son that in his tutelary capacity he was called upon to provide for the 
interests of his subjects and to see that the purposes of public institu- 
tions were accomplished. 

Law 1, Tit. IV, book 1, of the Recopilacion of the said laws pro- 
vides that " hospitals shall be established in all the Spanish and 
Indian towns." The third law of the same title and book provides 
that " viceroys, audiencias, and governors shall exercise care over the 
hospitals ; " the fifth, that " the priests of the beatified Juan de Dios, 
in the administration of the hospitals which they have in their charge, 
shall maintain the form prescribed by this law," which law contains 
important provisions ; the twentieth, that " the hospitals of Manila 
shall be in charge of the judge of the audiencia." 

The fifth law cited above, among other things, contains the fol- 
lowing : 

7. That the priests are given to understand that the hospitals entrusted to 
them, or which may be entrusted, are not given to them in order that they may 
be used as convents of their religion, nor that they may use them for its propa- 
ganda, since even to the most ancient this is not permitted without our partic- 
ular license, and others are totally prohibited from establishing themselves in the 
Indies ; and our will and intention in intrusting to them said hospitals is only 
that they may succor the sick in them, in accordance with their first and prin- 
cipal institution, which they have to maintain and accomplish, except in the 
edifices that by our law shall be declared to be convents only and used as such, 
and those which by particular permission and license shall be permitted to be 
used for this purpose. 



142 

This serves to confirm that which we have said above — that the 
priests of San Juan de Dios did not become owners of the hospital, 
but only exercised administration over the same by delegation from 
the civil power, and under supervision thereof. 

So it is also that, in spite of the deed of May 31, 1656, by which 
the Brotherhood of Santa Misericordia ceded to the priests of San 
Juan de Dios this hospital, stating that the said brotherhood made 
irrevocable donation to the Order of San Juan de Dios, and in their 
name to the vice-comisario of the same, of a hospital, houses and 
properties, annuities, accounts and debts, " negros y negras " (refer- 
ring to vestments), linen and medicines, and everything pertaining 
to the said hospital and to divine worship, and all that then and in 
the future should to it pertain,, in order that, as their property, " the 
priests should collect and enjoy them, using them according to their 
will, without restraint," the said priests did not acquire the property 
of the hospital. Apart from the fact that the brotherhood that made 
the cession did not possess the property, the law of the Indies cited 
declares that the priests mentioned should have charge of the hospi- 
tals, not to make convents of them, but only that they should in them 
give relief to the sick in conformity with the principal object of their 
institution, the ordinances of which (cap. 15) are as follows: 

That the Brothers of San Juan de Dios who shall be entrusted with the ad- 
ministering of the said hospital, and those that may be by them empowered 
with the management of the same, are given to understand that they do not 
exercise this authority as owners or proprietors of same and of their incomes 
and charities or alms, but as administrators and assistants of the said hospitals 
and of their poor, and in order to serve God in them, and to increase the 
pious and laudable object and vocation of their religion. 

Taking into account these antecedents, it is not extraordinary that 
when, after the lapse- of years, the priests of San Juan, forgetting the 
object of their institution and the mission that had been entrusted to 
them, and being guilty of conduct unworthy of their calling, and also 
exercising improper administration of the hospital, a royal cedula 
was issued on October 19, 1852, in which, among other things, the 
following is provided : 

IX. One of the points which represents most conspicuously the piety of my 
glorious predecessors has been the care they have taken in providing resources 
for the establishment of hospitals in all the towns of the Indies, and in the 
cities and villages inhabited by Spaniards, dictating the rules to which the 
Brothers of San Juan de Dios and other orders have to subject themselves in 
the administration of the same, when for convenience they entrusted these 
orders with the care of them ; but, as in the course of time many of these rules 
have been forgotten, and others have fallen into disuse, and as, above all, the 
suppression of the order of San Juan de Dios in the Peninsula has led to a 
diminution in these islands of the number of brothers of this order to such a 
degree that it is now impossible to properly attend to these hospitals, and 
moreover the vigilance formerly exercised over them by the superior of the 
order lacking, as there is no longer 'such an official, and it being desirable to 
find a remedy for this unsatisfactory condition in these hospitals, and being 
convinced that nothing would more greatly contribute to their improvement 
than the substitution of Sisters of Charity in the place of the Brothers of San 
Juan de Dios, as the sisters are achieving excellent results everywhere, I 
have directed that petition be made to His Holiness for the proper bull for the 
extinction of the houses of San Juan de Dios in these islands, and that in their 
place be sent Sisters of Charity to establish a nunnery in order that they may 
take charge of the hospitals, and also undertake the education of girls in the 
colleges of Santa Potenciana, Santa Isabel, the Jesuits, and San Sebastian, 
acting in conjunction with the patrons thereof. (Rodriguez San Pedro, Colonial 
Legislation, vol. 7, p. 880.) 



143 

The orders contained in the foregoing cedula concerning the final 
extinction of the Order of San Juan de Dios were affirmed by royal 
order of August 17, 1865. A copy of the said royal order is attached, 
taken from San Pedro's work on Colonial Legislation (vol. 12, p. 
438). 

For the purpose of executing the said royal order on the 29th day 
of August, 1866, the superior government of these islands issued a 
decree directing the transfer to Cavite of the ecclesiastics of San Juan 
de Dios and appointing a board of inspection to take charge of the 
administration of the hospital. A copy of the said decree is at- 
tached, taken from San Pedro's Colonial Legislation (vol. 10, p. 445), 

This decree commences as follows: 

The spirit of the royal order of August 17, 1865, unquestionably is that the 
administration of the Hospital of San Juan de Dios of Manila become com- 
pletely civil, although temporarily, and form a department of the administration, 
inasmuch as, invoking paragraph 9 of the royal cedula of October 19, 1852, it 
directs that the hospital be immediately withdrawn, by the authority of the 
superior governor, from the administration of the ecclesiastics of the Order of 
the Hospitalers. This spirit, the text of the order in the part referring to the 
measures adopted for the ecclesiastical visit directed to be made in the estab- 
lishment at the request of certain worthy ecclesiastics, and the final directions 
thereof are conclusive evidence that the execution of that royal order makes the 
Hospital of San Juan de Dios an establishment for the present purely civil. If 
these reasons are not sufficient to show the legality of this position, many others 
of the same nature might be advanced, and among them the most important is 
that upon the removal from that hospital of one religious order their place can 
not be taken by another order, or even by individuals of an ecclesiastical char- 
acter, without inducing most grave and dangerous results. It is the duty of the 
administration, as the protector of all public interests, to overcome this diffi- 
culty and to take charge of the place where the unfortunate sick are at the 
present time in need of assistance. This is, moreover, the opinion entertained 
by His Majesty's Government. 

Third. The Hospital of San Juan de Dios of Manila and its dependencies 
shall be in charge of a board of inspection composed of his excellency the 
regent of this royal audiencia, as president; Don Tomas Balbas de Castro, 
councilor of administration, ex-president of the late auditing committee of the 
hospital, and at the present time acting as liquidator thereof, by virtue of 
which he should discharge the duties of treasurer ; Don Mariano Tuason, Don 
Francisco de Paula Sembrano, Don Juaquin Pardo de Tavera, councilors of 
administration ; and Don Manuel Asensi, chairman of the claims committee of 
the council, and Don Casimiro Cortazar, chief of section of the superior gov- 
ernment, the latter to act as secretary. 

Fourth. For the interior administration of the hospital there shall be an 
administrator and a major-domo, to be appointed by this superior government, 
who shall discharge their respective duties under the inspection of the board. 
Both should be classified as temporary employees and shall receive a salary 
of 1,200 crowns and 800 crowns, respectively. 

Fifth and last. The board shall recommend to this superior government such 
alterations and reforms in all branches of the hospital service as may be feasible 
and proper to introduce, their suggestions to be made with a view to the 
greatest economy. The board shall also immediately fix the amounts of the 
bond to be given by the administrator of the hospital. 

Since that time the Hospital of San Juan de Dios has been and is a 
purely civil institution, under the exclusive administration of the 
Government, the church not having any intervention or part what- 
soever in this administration. From the delegated administration of 
the Franciscan ecclesiastics the hospital passed to the administration 
of the state derived from the sovereign power. It would be a vain 
claim for the church to make that the Government assumed the ad- 
ministration of the Hospital of San Juan de Dios under the right of 
patronage, and that this being a pontifical grant, an ecclesiastical 



144 

power, it could not have been transferred to the United States by 
virtue of the treaty of Paris, owing to the separation of church and 
state prevailing in that country. Such an argument would be un- 
founded and absolutely without support, unless it be upon the inad- 
missible supposition, which has served as a starting point for the 
church and its representatives in other questions, that eleemosynary 
institutions, founded by the authority of the church and with the 
license of the King, are pious foundations, which form part of the 
property of the church, whose administration is vested in the latter 
by canon law, and that the administration of the government is 
under the patronage and by delegation of the Pope. Such an argu- 
ment would be to establish as a fact a controverted theory. 

Much might be said on the subject of patronage, but neither time 
nor the purpose of this communication will permit. 

I might add, however, that the Hospital of San Juan de Dios, as 
shown by the foregoing, is not the property of the church, and that 
the latter therefore can advance no right to the administration of the 
hospital. It is a charitable foundation of public character, whose 
authorized patron, the Order of San Juan de Dios, has been sup- 
pressed. In the absence of any person to take charge of the admin- 
istration, the government, as the tutelary power of the nation, or as 
parens patriae, is under the duty of providing for the vacant admin- 
istration, in order that, in the interests of the public, the purposes of 
the establishment may not fail for the public benefit. Such power 
and duty is an attribute of sovereignty, and as such is exercised even 
in those countries in which church and state are separate. 

The exclusively civil character of the Hospital of San Juan de 
Dios is in no wise modified by the fact that the royal order of October 
6, 1891, on account of the many and pressing duties devolving by 
reason of his office upon the president of the audiencia, directed that 
the presidency of the board of the Hospital of San Juan de Dios, 
and of other charitable institutions, be filled by the provincial of one 
of the four religious orders established in these islands, as this 
appointment was made by the civil authorities, and the provincials 
performed their duties as officers of the state. 

What has been said leads to a confirmation of the conclusion that 
the Hospital of San Juan de Dios is a charitable foundation, existing 
independently, and is a juridical person within the meaning of 
article 35 of the civil code, and that the administration thereof per- 
tains to the Government of the United States in these islands in 
subrogation of the Government of Spain, in which it was formerly 
vested. 

Very respectfully, Gregorio Araneta, 

Solicitor- General. 

Approved : 

L. K. WlLFLEY. 

The Civil Governor. 



OLD STATUTES OF THE BANCO ESPANOL-FILIPINO. 



Office of the Colonial Minister. 
STATUTES OF THE BANCO ESPANOL-FILIPINO. 

Title I. — The name, constitution, title, object, domicile, and dura- 
tion of the association (sociedad). 

Article 1. The Banco Espanol-Filipino, duly incorporated in 1851 
and reorganized by virtue of royal decree of February 7, 1896, shall be 
governed by these statutes. 

Art. 2. The Banco Espanol-Filipino shall continue to exist for a 
period of twenty-five j^ears commencing from the 1st of January, 
1903. Upon the necessary proceedings being had and due authoriza- 
tion granted, this period may be extended at the request of the gen- 
eral board of stockholders (junta general de accionistas) provided 
such request be made at least one year before the expiration of the 
twenty-five years mentioned. 

Art. 3. The domicile of this association (sociedad) shall be at 
Manila. 

Art. 4. The business in which the bank may engage is as follows : 

(1) Discounting bills of exchange (letras de cambio) and com- 
mercial promissory notes (pagares de comercio) whether the bearer 
be a merchant or otherwise. The bills of exchange referred to must 
not extend beyond six months, and the promissory notes referred 
to not beyond ninety days, and both shall have the guaranties and 
requisites provided by article 7. 

(2) Making collections intrusted to it of current and cash obliga- 
tions ( obligaciones corrientes y efectivas) and it may make advances 
upon the same in such cases as the governing board (junta de gobi- 
erno) shall decide upon. 

(3) Opening current accounts in coined money (metalico), public 
or industrial and mercantile securities (efectos publicos 6 valores 
industriales y mercantiles) issued by legally established concerns 
(firms) . 

, (4) Caring for voluntary, necessary, and judicial deposits made to 
it in money, ingots or jewels of gold and silver with or without pre- 
cious stones, public or industrial and mercantile securities issued by 
legally established concerns (firms). 

(5) Negotiating or drawing domestic or foreign bills of exchange, 
observing the formalities laid down in the Code of Commerce. 

(6) Dealing in gold and silver. 

(7) Making loans for a period not to exceed ninety days with guar- 
anty and collateral (deposito) such as precious metals, articles of 
commerce, procTucts of the country, public or industrial and mercan- 

(145) 



146 

tile securities that are safe and easily realized upon, provided, how- 
ever, that all such collateral shall first be approved by the governing 
board. Such collateral shall be received at three-fourths its value or 
quotation. When, however, the person or legal entity to which a loan 
is to be made is, in the judgment of the governing board, sufficiently 
solvent apart form the collateral given, then the governing board may 
direct that such collateral shall be received at 90 per cent of its value, 
provided always that the same consists of products of the country, 
public or other securities easily realized upon, and that the borrower 
appear on the credit list of the bank. In every such case, however, 
the borrower shall be required to replace in coin, public securities 
(valores publicos 6 efectos) the amount of the depreciation which such 
securities may suffer, so that the amount advanced thereon may at all 
times be fully covered. 

(8) Loans on bills of lading accompanied by invoices and in- 
surance policies, in which cases the amount advanced shall not exceed 
three-fourths of the value of the articles covered by such bill of lading 
according to the current market price. 

(9) Giving credit, deposit first being made, upon public or indus- 
trial and mercantile securities approved by the governing board to 
such amount as the rate fixed for loans may indicate. Persons to 
whom such credit is given, whether they make use of the same or not, 
shall pay a commission on the amount thereof in such amount as the 
governing board may direct and also such interest as may be agreed 
upon beforehand on the funds placed at their disposal. Credit may 
also be advanced on current accounts with security (garantia). In 
returning and selling securities (garantias) the same rules shall be 
observed that are provided for securities (garantias) in the case of 
loans. 

(10) Raising funds on securities belonging to it or otherwise nego- 
tiating the same whenever it may be necessary. 

(11) Contracting with the treasury of the islands under security 
given by the same through its suboffices (dependencias), and author- 
ity being first had from the colonial minister. 

(12) Making loans to provinces or municipalities within its terri- 
tory upon approval by the protector and upon good collateral (seguras 
garantias) . 

(13) Making loans to firms and associations established in the 
archipelago, and which, in the opinion of the governing board, shall 
be able to meet their obligations. 

(14) Making loans on property (fincas) to one-half the value 
thereof, and in no case shall it issue debentures without right of 
redemption. 

(15) Making loans on ships which are insured, without liability 
for loss, the amount advanced in such case not exceeding one-half the 
value of the ship and not for a period of more than one year. The 
foregoing transactions can be made only when there is a surplus in 
the treasury and there is not, in the judgment of the governing board, 
a reasonable hope of being able to employ such surplus advan- 
tageously in mercantile transactions. 

(16) Discounting acquittances (cartas de pago) of the " Caja de 
Depositos " at Manila within the' time specified in the by-laws (plazos 
reglamentarios) . 



147 

(17) Undertaking on commission such other banking business or 
credits as it may deem proper. 

(18) Arranging with the colonial minister or his duly authorized 
representatives for the issue and negotiation of public securities, the 
payment of obligations incurred through the same, or any other serv- 
ice of the treasury. 

(19) And, finally, transacting such other business as in the judg- 
ment of the governing board may be required by the commercial 
needs and practices of .the archipelago, and which is compatible with 
the safety of other business. 

Art. 5. The bank shall not deal in public securities (efectos publi- 
cos), but it may acquire directly from the state such securities when 
issued b}^ it. 

Mortgage obligations created by royal decree of June 28, 1897, are 
excepted from this restriction and the same may be freely acquired 
and disposed of by the bank. 

Art. 6. The bank shall not acquire by purchase its own stock, nor 
shall it accept the same as security on loans nor transact any business 
based thereon. 

Art. 7. Bills of exchange and promissory notes discounted by the 
bank must comply with the requirements of the code of commerce, and, 
furthermore, be signed by two persons known to be solvent, one of 
which persons must necessarily appear on the credit list of the bank 
and be a resident in the locality where the transaction is had. 

Should one of said signatures be wanting, it may be supplied by 
the security mentioned in the seventh provision of article 4. In 
no case shall promissory notes or bills of exchange (or drafts) be 
discounted which in the judgment of the bank authorities have 
already been discharged (valores de solucion). 

Treasury drafts on its funds ( ? ) may be discounted without the 
signatures and other requirements provided for in the case of private 
parties. 

Art. 8. Before making a loan on precious metals, articles of com- 
merce, and products of the country on deposit, the value of the same 
shall be assessed by experts appointed by the bank officials. The 
bank will in no case be responsible for waste or damage to articles of 
commerce and products of the country deposited with it. 

Art. 9. Buildings (fincas) upon which mortgages are to be exe- 
cuted to the bank, must show a perfect title and be free from all 
incumbrances and responsibility, and, in case they are city property, 
they must be constructed of strong materials (materiales fuertes) 
and covered by insurance. 

Art. 10. Articles covered by bills of lading upon which the bank 
,is to make loans shall be consigned to such person as the bank shall 
designate at the point of destination, which person shall deduct the 
current commissions and carry out the orders of the owners thereof 
in order to effect returns, but directing them to the bank for the 
final settlement of the transaction. 

Should the articles be lost, the bank may proceed, at its election, 
against the owner thereof for the amount agreed upon, or against 
the company insuring the same for the amount of the insurance. 

Art. 11. For deposits made in the bank the proper officers thereof 
(administracion) shall issue suitable receipt setting forth: First, 



148 

the name and domicile of the depositor or official ordering the de- 
posit; second, the nature and value of the deposit and whether it 
consists of ingots or jewels of gold or silver, its weight and particular 
qualities; third, the date of the deposit, and the number of its 
register. 

Art. 12. The officers of the bank (administracion) shall be the 
judge whether it allow or refuse the discounting of bills of exchange 
or drafts and promissory notes presented to it, as also xequests for 
loans made to it, and such other transactions as may be proposed, 
and in no case shall they be obliged to give the reasons for their 
ruling. 

Art. 13. The interest on discounts and loans and also on deposits, 
collections, mortgages, etc., shall be fixed every six months by the 
governing board of the bank with the approval of the protector ; and 
the expenses of assessment of articles given as security, and such 
other expenses as such transaction may require, shall be charged to 
the borrower. 

Art. 14. The bank shall have the power to order the sale of securi- 
ties (colateral-garantias) consisting of securities or effects (valores 
6 efectos) three days after having called upon the debtor, simply by 
written notice, to replace the loss in such securities (colateral-garan- 
tias) , should he not then do so, or after the expiration of the period for 
which the loan was made should he not have paid the amount thereof. 
Such sales shall be made at extrajudicial public sale, at which trans- 
action a notary public, a lawfully appointed exchange agent, or duly 
licensed broker shall assist, without the necessity of a judicial order 
to that effect ; and in order that there be no obstacle in such transfers 
and that the bank may at all times make the sale without the inter- 
vention of the debtor, it shall be set forth in the record of the loan 
that the articles given as security shall be considered as transferred 
to the bank, without other formality, by the mere fact of having 
delivered them to the same as such, and to date from the day on which 
the bank shall have acquired the right of sale according to the first 
paragraph (sentence) of this article, 

Nonnegotiable securities (valores nominatives) must be trans- 
ferred in due form; nevertheless (but) the directors of the bank shall 
give to the parties interested a receipt setting forth the sole and 
exclusive purpose of such transfer. 

Should the proceeds from the sale of securities not fully cover the 
amount loaned, with interest and expenses thereon, the bank may 
proceed for what remains due against the debtor; should the pro- 
ceeds exceed said amount, the excess, should there be any, shall be 
returned. 

In the case of loans made on bills of lading, the borrowers shall be 
required to replace the security whenever the same is reduced by 
more than ten per cent of its value ; and if upon the maturity of the 
obligation the same have not been satisfied, and the ship bearing the 
effects or merchandise that constitute the security should not have 
arrived, the bank may proceed against the debtor or wait the arrival 
of the ship in order to make a sale of said securities, with the under- 
standing, however, that should the bank elect the former remedy it 
shall not thereby lose its right to proceed against the security at such 
time and in such manner as may be proper. 



149 

Art. 15. The bank shall have the exclusive right of issuing bank 
notes throughout the archipelago, payable at sight to bearer, to three 
times the amount of the capital stock issued and outstanding (capital 
efectivo que tenga apartado), subject to the provisions of article 180 
of the Code of Commerce, or, in other words, whenever it has in its 
vaults, in coin, a fourth part, at least, of the amount of deposits, cur- 
rent accounts in coin, and bank notes in circulation. The bank notes 
which may be issued shall be of five, ten, twenty-five, fifty, one hun- 
dred, and two hundred pesos each. 

Art. 16. The counterfeiting (falsification) of the notes of the bank 9 
and the wilful passing of counterfeit or forged bank notes, shall be 
prosecuted by the State with the same activity and energy as in the 
case of a public crime, and punished in accordance with law. The 
bank may join as a party in the prosecution should it so desire. 

Art. 17. The bank shall open a branch (sucursal) in Iloilo and 
such other points in the archipelago as the general board of stock- 
holders may deem necessary. Branches in points other than Iloilo 
may be established only when the bank has a capital of two million 
pesos, and after first having had the apprpval of the colonial minister 
with regard to the place where the branch is to be situated. 

In each branch there shall be placed on deposit such amount of the 
bank notes as the importance of its operations may require, and such 
bank notes shall be identified by a seal indicating the place to which 
they belong. 

Such branches may be closed down when in the judgment of the 
governing board of the bank it has been shown they are no longer 
useful for the object for which they were created, and upon full 
report to the first general meeting following, and communicating the 
action of said general meeting to the protector. 

Since these branches are a part of the bank, the capital of the bank 
shall be responsible for the legal effects of the obligations which they 
lawfully contract. 

These branches shall be governed by instructions drawn by the 
governing board, subject to these statutes. 

Art. 18. Foreigners may acquire stock in the bank and engage in 
all other transactions of exchange and draft (operaciones de cambio y 
giro) relating to the bank, in the same manner as Spanish subjects 
(nacionales) ; but they shall not be allowed to hold any office in the 
government and administration of the bank unless they possess 
naturalization papers and are domiciled in the country. Securities 
deposited in the bank belonging to foreigners shall not be subject to 
attachment, confiscation, or seizure (represalia) in case of war be- 
tween their respective nations. 

' Art. 19. Whenever doubts or controvercies arise in matters con- 
cerning the internal government of the bank or compliance with its 
statutes or by-laws, the same shall be settled by the protector as gov- 
ernor (gubernativamente) upon first hearing the report from the 
governing board. 

Art. 20. The Banco Espanol-Filipino may be called upon (ad- 
quiere) to aid the treasury of the archipelago by a gratuitous loan 
up to the amount of five hundred thousand (1*500,000) pesos, when 
the capital of the bank does not exceed one million five hundred thou- 
sand (Fl,500,000) pesos, and with a third part of its capital when it 

22380—08 11 



150 

does exceed this amount. In either case the time for which the bank 
may be obliged to advance the 500,000 pesos or third part of its capi- 
tal, shall not exceed six months in each calendar year (aiio natural) ; 
and this amount may be loaned in one or several sums, either at one 
time or at distinct periods. In all other transactions which the 
treasury of these islands may have with the bank, the interest shall 
be one and one-half per cent less than the current discount given the 
public, and said interest shall in no case exceed five per cent per 
annum. 

Title II. — Capital stock (capital social) and shares. 

Art. 21. The Banco Espanol-Filipino, established with a capital 
of one million five hundred thousand (1^1,500,000) pesos, may in- 
crease its capital to three million (f*3,000,000) pesos, according as 
the commercial needs and the development of its operations may 
require, and upon first having the consent of the general board of 
stockholders, 

Art. 22. Both the capital indicated of one million five hundred 
thousand (^1,500,000) pesos, and any increase of the same that may 
be made up to the sum of three million pesos, shall be represented by 
shares of the face value (acciones nominativas) of two hundred 
(f*200) pesos each. 

Art. 23. Said capital of one million five hundred thousand 
(?1 ,500,000) pesos shall be (esta) represented by 7,500 shares at 200 
pesos each. 

The shares that may be issued until the capital of three million 
pesos authorized to the bank is completed shall be issued when the 
general board (of stockholders) authorizes the increase of the capital, 
in which case the issue shall be made upon payment of (satisfacien- 
dose) 200 pesos for each share, plus such percentage at least as corre- 
sponds to such share with respect to the amount (importancia) of 
reserve funds on hand ;n the bank on the date of issue. 

Art. 24. The bank shall maintain a legal reserve fund of fifteen 
per cent of its capital stock issued and outstanding (capital efectivo). 
This fund shall be subject to the same obligations as said capital, and 
it shall be made up of the net profits resulting from the operations 
ot the bank after deducting the annual interest of the capital, which 
in no case shall exceed eight per cent. 

Besides this fund, the bank may create another voluntary reserve 
fund to cover the dividends, when the net distributable profits do not 
reach eight per cent of the amount represented by each share (capital 
de cada accion). This fund shall in no case be applied to increasing 
the capital of the bank. 

Art. 25. The shares of stock of the bank shall be represented by 
inscribing (inscripciones) the name of a given person or entity in 
the bank register, and by issuing to the owners thereof stock certifi- 
cates (titulos nominales). In the same way the new stock for the 
increase of the present capital of the bank shall be issued, to the 
amount and for the periods fixed by royal decree of February 7, 1896. 
(See Alcubilla, Appendix 1896, p. 161.) The governing board of 
the bank shall determine such method as it may deem proper for 
effecting the issue. 



151 

Art. 26. Bank shares shall be transferable in all the ways known 
to the law, except the one thousand which were issued as nontrans- 
ferable and inalienable, which shall retain their character so long as 
the corporations that possess them do not request their transfer 
(enajenacion), and His Majesty's Government direct the same. In 
order to attach shares, an order from competent authority shall be 
necessary. 

Art. 27. A transfer of shares, whatever be the method of making 
the same, must be made to appear by a declaration made before a 
proper officer of the bank (administracion del banco) in person by 
the party transferring the same to another, or by a special attorney 
who shall sign in the register of said bank, showing said transfer, 
and, upon first presenting in the office of the bank the original cer- 
tificate (titulo original de inscripcion) , whereupon a new certificate 
will be issued to the transferee. 

When the transfer of the ownership of shares is the result of hered- 
itary succession, and there is but one heir, an affidavit (testimonia de 
la clausula de institucion) , or the judicial decree declaring said heir 
to be the heir of the intestate, shall be presented at the bank so that 
he may be known as the successor to the ownership of the shares of 
his ancestor. 

When there are many persons interested in the inheritance,^ the 
successor to the shares shall present, apart from the substitution or 
declaration of the heir, proof of his interest in the part claimed (parte 
necesaria). 

Art. 28. The responsibility of stockholders for the transactions 
of the bank shall be restricted to the value of the shares possessed 
by them, in harmony with the provisions of the code of commerce 
relating to corporations (sociedades anonimas). 

Art. 29. The bank shall not hold any more real property (bienes 
inmuebles) than is necessary for its service. It shall be allowed, 
nevertheless, to acquire real property adjudged to it in payment of 
debts when such debts can not be settled advantageously in any other 
way ; but it should dispose of the same as soon as practicable. 

Title III. — Concerning the application and distribution of the profits 

of the bank. 

Art. 30. The profits or gains resulting from the operations of the 
bank, after deducting the expenses of administration, and, when 
proper, such part as corresponds to the legal reserve fund, shall be 
applied as follows: Ten per cent to the directors (direccion), and 
five per cent to the governing board (junta de gobierno) ; the same to 
be distributed in the manner provided in the by-laws (reglamento). 
The remaining eighty-five per cent shall belong as a whole to the 
stockholders, and shall be divided among them according to the num- 
ber of shares held by each. 

Art. 31. These profits shall be distributed in dividends, which shall 
be declared every semester, as follows: Should the liquidated, dis- 
tributable profits not exceed eight per cent per annum on the par 
value of each share, the whole shall be distributed; should there be 
an excess over said eight per cent, it shall be divided one-half to the 
stockholders and one-half to the legal reserve fund mentioned in 



152 

article 24, until the same is completed; after which the surplus 
shall be divided amongst the stockholders, in whole or in part, or 
it may be used for the creation of the voluntary reserve fund, also 
mentioned in said article, as the governing board may deem best. 

Art. 32. The balance sheet provided for in article 157 of the code 
of commerce shall be drawn up and published monthly. 

Title IV. — Concerning the government and administration of the 

bank. 

Art. 33. The high direction and supreme control of the bank shall 
be in the protector, the governor-general of the Philippine Islands, 
who may temporarily delegate his powers as protector, to such an 
extent as he may deem proper, to some person in his confidence who 
is a councillor of the administration (consejero de administracion) , 
or who holds an administrative rank equivalent thereto. 

Art. 34. The government and administration of the bank shall be 
conducted, subject to the supervision of the protector or of the per- 
son to whom he has delegated his powers, in accordance with article 
33, by the general board of stockholders (junta general de accio- 
nistas) , by the governing board (junta de gobierno) , and the board of 
directors (una direccion), who shall have the powers granted them 
respectively by these statutes. 

Title V. — Concerning the authority of the protector and powers of 
the person to whom he temporarily delegates his duties. 

Art. 35. The following shall be the powers of the protector : First. 
The appointment of directors (directores), the secretary, and one of 
the sindics (sindicos) from among the three persons whose names 
may be submitted to him by the general board of stockholders. 
Second. To appoint, on his own motion, the other sindic, without 
the necessity of having such names so submitted. Third. To direct 
(determinar) the issue of shares. Fourth. To approve the rate of 
interest to be collected by the bank on discounts and loans made by it. 
Fifth. To suspend or discharge from their respective offices directors 
and voting members (vocales) of the governing board, when there is 
sufficient motive, or well-founded cause for doing so. Sixth. To de- 
cide in his capacity as governor such doubts and controversies as may 
arise concerning matters relating to the internal government of the 
bank, or the observance of the statutes and by-laws thereof. Sev- 
enth. To order the revision of the statutes and by-laws of the bank 
whenever he deems it proper, or on request of the general board of 
stockholders. Eighth. And finally, to exercise, as the representative 
of His Majesty's Government, the powers granted him by law with 
regard to protected and privileged public establishments. 

Art. 36. The person to whom the protector delegates his powers, 
and in lieu thereof the director on duty (director de turno), shall 
have the following powers : 

First. To call general meetings, both ordinary and extraordinary, 
upon motion to him by the governing board, for sufficient cause. 

Second. To convene the governing board in extraordinary session 
whenever he deems it necessary, either on his own motion, or at the 
request of one of the sindics. 



153 

Third. To preside at the general meetings and at the meetings of 
the governing board, without vote. 

Fourth. To direct the suspension, on motion of one of the sindics, 
of resolutions passed at the general meetings and by the governing 
board, when the same are not found to be in accord with the statutes 
and by-laws. 

Fifth. To exercise a supervision over the entire bank service, and 
submit to the protector such recommendations and reports as he may 
deem proper concerning its condition, and proposing such alterations 
and modifications as he may deem necessary for the better manage- 
ment of the establishment. 

Sixth. To be present at the making of the monthly inspection 
(" arqueo ") and balance ("balance"), signing his approval of the 
same in the proper book. 

Seventh. To draw up special reports requested of him by the pro- 
tector concerning the business of the bank, making beforehand such 
inspections of the registers, documents, and papers of the establish- 
ment as he may deem necessary. 

Title VI. — Concerning the powers of the general hoard of stock- 
holders. 

Art. 37. The stockholders of the bank shall be represented at the 
general meeting by those among them who are owners or beneficiaries 
of at least ten shares, inscribed in their favor three months before 
holding the meeting, and this shall be determined by reference to the 
registers of the establishment. 

Stockholders may be represented at general meetings by proxies 
consisting of such persons as they may elect, whose appointment shall 
be made by executing power of attorney before a notary public. 
(Free.) 

Stockholders who do not enjoy full legal capacity, such as married 
women, minors, etc., or possessing the character of legal entities, 
associations, corporations, etc., shall be represented at the general 
meetings and also in all other matters relating to the bank by their 
legal representatives. 

Art. 38. The absence of stockholders from the general meetings 
shall deprive them of the right to contradict and oppose the action 
of the majority, provided that such action be not contrary to the pro- 
visions of these statutes. 

Art. 39. Members present at the meeting who possess ten shares 
shall have one vote, those possessing twenty shares shall have two 
votes, but in no case shall any stockholder have more than two votes, 
be the number of shares possessed by him what it may. 

Art. 40. The general meeting of the (stockholders of the) bank 
shall be regularly held on the third day of February of each year, 
and shall continue, if necessary, during the two following days, but 
no longer, except upon authority granted by the protector. 

Art. 41. The general board (of the stockholders) of the bank shall 
have power : First. To appoint the councilors of the governing board. 
Second. To appoint the cashier from among three names submitted 
by the governing board. Third. To propose to the protector, through 
the directors of the bank (direccion del banco), three names each for 



154 

the positions of directors, secretary, and one of the sindics. Fourth. 
To inform themselves of the situation of the bank through a report 
which shall be presented by the governing board, and of the general 
balance of annual accounts which they shall see and examine. Fifth. 
To act on recommendations made by the governing board, relating 
to the better order and prosperity of the establishment, in accord- 
ance with the statutes and by-laws. Sixth. To draw up such state- 
ments as they may deem proper to be submitted to the protector 
concerning the improvements and reforms that might be made in the 
bank, the same to be transmitted through the director on duty (di- 
rector de turno). Seventh. Every member of the general board (of 
stockholders) may present before said meeting, in writing, such sug- 
gestions as he may deem proper to the welfare of the bank, but such 
recommendations shall not be discussed until the next following meet- 
ing and until the action of the governing board thereon has been 
heard. Eighth. To direct the increase of the capital and the manner 
and conditions subject to which the same is to be made. Ninth. And 
to exercise the powers and attributes expressly given to them by 
these statutes and in the by-laws. 

Art. 42. A general meeting (of the stockholders) of the bank may 
be convened in extraordinary session: First. When the number of 
members of the governing board has been reduced to one-third by 
death, or other legal impediment which may make it impossible for 
the members thereof to perform their duties. Second. Whenever 
one of the sindics shall request an extraordinary session for the pur- 
pose of considering grave and urgent matters of interest to all the 
stockholders, and the director on duty (director de turno) shall con- 
sider the same necessary. 

Art. 43. The resolutions passed at the general meeting (of the 
stockholders) of the bank upon the matter of appointment of per- 
sonnel will be had by secret vote and will require an absolute ma- 
jority of votes. Should an election not be obtained on the first ballot, 
a second ballot will be taken on the persons who were voted for on 
the first ballot; and should none of these obtain a majority, a third 
ballot will' be had on the two persons who obtained the greatest 
number of votes on the preceding ballot. In case of a tie, the senior 
(in age) candidate shall be held to be elected. 

Art. 44. In transacting business of any other nature the vote of 
the meeting will be had in public, and a majority of the votes shall 
govern. 

Title VII. — Concerning the governing hoard {junta de gooierno). 

Art. 45. The governing board of the bank shall consist of two 
directors who shall be honorary members thereof, six councilors 
(conciliaros), and one sindic appointed upon the recommendation of 
the general board, and another sindic to be named by the protector. 
Members may be reelected to these positions. 

Art. 46. The six councilors and the sindic appointed by the gen- 
eral board shall perform their duties, two councilors being added each 
year. 

The sindic appointed by the Government (protector?) shall hold 
office for four vears. 



155 

The directors shall hold office for two years, the senior member 
being replaced annually in accordance with the provisions of num- 
ber one of article 35 and number three of article 41. 

Art. 47. Members of the governing board must have on deposit in 
the vaults of the bank (en la caja) during their term of office at least 
ten shares of stock. 

Art. 48. Both the councilors (conciliaros) and the sindics shall be 
entitled in respect of these offices to an attendance fee for all sessions 
held by the governing board. The allowance (cuota repartible) is 
fixed in article 30 herewith. 

Art. 49. The duties of the governing board shall be (son) : (1) To 
issue stock certificates (inscripciones de las acciones del Banco). 

(2) To determine (proponer) the number of bank notes to be issued. 

(3) To fix the percentage (premio) that shall be required on discounts 
and loans. (4) To draw up private lists (listas reservadas), in alpha- 
betic order, of the firms which it considers creditable for discounts, 
setting forth the amount of credit to be extended to each one. (5) To 
appoint commissioners (comisionados) and correspondents (corre- 
sponsales) , and to designate the points where they are to be stationed. 
(6) To direct the establishment of branch banks (succursales) at such 
points as are suitable both to the public interest and the bank, in 
accordance with article 17 of these statutes. (7) To approve, on the 
proposal of the directors (direccion), transactions had by the bank 
with State establishments (establecimientos del estado). (8) To see to 
it that in all the offices and dependencies of the bank the statutes, by- 
laws, orders, and resolutions in force are observed. (9) To examine 
at each session the operations of the directors (direccion) and the 
movement of the bank during the week. (10) To appoint, on recom- 
mendation of the directors (direccion), a bookkeeper and all the 
minor employees of the bank, and also all those of such branch banks 
as it may establish. (11) To suspend for grave and sufficient cause 
any employee of the bank, and to discharge such as are not appointed 
by the protector. (12) To draw up the annual report (memoria 
anual) concerning the operations of the bank, which shall be read 
before the general meeting. (13) To examine and audit the accounts 
to be made each year by the directors (direccion), and to present the 
general balance. (14) To declare every semester, in accordance with 
such balance and the state of the voluntary reserve fund, the dividend 
to be paid to the stockholders. (15) To examine into and take under 
advisement recommendations made by the members of the general 
board for the welfare of the bank, and present the same, with their 
report thereon, to the next general meeting. (16) To make, of its own 
motion, to said general meeting all suggestions that it deems proper 
for the extension and prosperity of the establishment. 

Art. 50. The sindics shall only have a voice (voto consultivo) in 
the governing board, together with the following powers: (1) To 
make complaint concerning any abuse they may observe in the opera- 
tions of the bank and in the management of its offices. (2) To ex- 
amine and pass upon all reports, accounts, and balances of the bank. 
(3) To oppose the carrying out of resolutions passed by the govern- 
ing board which are contrary to the statutes of the bank or prejudicial 
to its interests, and to make report to the director on duty (director de 
turno) for the purpose of having the same suspended, and to report 
to the protector when they consider it necessary. (4) To oppose at 



156 

all times the issue of a greater number of bank notes than the whole 
number authorized by these statutes. 

All complaints made by the sindics shall be inscribed literally in the 
minutes of the governing board. 

Art. 51. The sessions of the governing board shall be held when- 
ever the director on duty (director de turno), of his own motion or 
at the request of one of the sindics, shall deem them necessary. 

Art. 52. No action whatsoever shall be taken at the sessions of the 
governing board save when they are present at least four voting mem- 
bers and one of the sindics. 

Art. 53. Resolutions of the governing board must be passed by a 
majority of the votes of the members present, and, in case of a tie, the 
opinion of the president- director on duty (presidente director de 
turno) shall decide. 

Art. 54. The secretary of the bank shall be present at all the ses- 
sions of the governing board, without voice or vote, and shall draw 
up the minutes, which shall be signed by the president, one councilor, 
and the secretary himself. 

Title VIII. — Concerning the directors of the hank (direccion del 

banco). 

Art. 55. The administration of all the affairs of the bank and the 
control of its operations shall be in charge of the directors (directo- 
res), assisted by a secretary who shall perform such duties as they 
may direct. When by reason of sickness or absence of a director, or 
when there is a vacancy in this office, the governing board shall imme- 
diately submit, through the directors of the bank (direccion del 
banco), the names of three eligible persons, from amongst whom the 
protector shall appoint those who are to fill the office temporarily 
until the calling of the next general meeting of the stockholders. 

Art. 56. Any person not exercising full ownership over twenty 
shares of stock deposited in the vaults (caja) of the establishment, 
shall not be allowed to hold office as a director of the bank. (Free.) 

Art. 57. The directors shall receive the compensation designated in 
article 30, which shall be divided equally between them. 

Art. 53. The powers of the directors of the bank shall be (son) : 
(1) To direct all the operations of the bank and to give orders and 
instructions to all the employees thereof who are to take part in 
said operation. (2) To execute (celebrar) all contracts and per- 
form all transactions undertaken by the bank in accordance with its 
statutes. (3) To arrange with the agents of the Government the 
exchange transactions (operaciones de giro) which the bank is to 
carry on, subject to the approval of the governing board. (4) To 
carry on with the authorities, public officials, and private corpora- 
tions such correspondence of the bank as relate to its administration. 
(5) To authorize with their signatures all administrative acts, and 
obligations and documents issued by the bank. (6) To give their 
consent and approval to all discounts and loans that are to be made. 
(7) To institute all judicial proceedings that may be necessary for 
the collection of the debts (creditos), and the preservation of the 
rights of the bank, and to appear in court in the name thereof. (8) 
To propose to the governing board for its action the course to be pur- 



157 

sued in important business and transactions not provided for by these 
statutes. (9) To propose to the governing board a bookkeeper, and to 
make known to the same the individuals they consider suitable for the 
office of cashier, so that a list of three names may be prepared to pre- 
sent to the general meeting of stockholders, to which body pertains 
the right to appoint this employee. (10) To appoint all subordinate 
employees (dependientes) and servants of the bank. (11) To watch 
over, as the immediate heads of the establishment, the conduct of all 
its employees, important and otherwise, in the performance of their 
duties, and to temporarily suspend for just cause those who are de- 
linquent therein, except the secretary, cashier, and bookkeeper, who 
can only be suspended by the governing board. (12) To call the 
regular general meetings and such extraordinary general meetings 
as may be proposed for sufficient cause by the governing board, and 
also to convene the governing board. (13) To preside over the gen- 
eral meetings and the meetings of the governing board, with a vote. 
(14) To order the suspension of the resolutions of the governing 
board on motion of one of the sindics when the same are found not 
to be in harmony with the statutes and by-laws. (15) To make 
visits of inspection throughout all the offices of the bank, and to ad- 
dress to the protector such recommendations as they may deem 
proper concerning its condition, proposing to him suitable alterations 
or modifications for the better government of the establishment. 
(16) To be present at the making of the monthly inspection and bal- 
ance, signing their approval in the proper book. (IT) To sign stock 
certificates (rubricar los titulos de inscripcion de acciones) and to 
authorize with their signatures notes issued payable to bearer. (18) 
To draw up special reports requested of them by the protector con- 
cerning the affairs of the bank, first making such inspection of the 
registers, documents, and papers of the establishment as they may 
deem necessary. (19) To examine the report to be made to the gen- 
eral meetings relative to the situation of the bank, and to vise the 
same before it is read to the meeting, requiring in advance such 
proofs of the correctness of its contents as they may deem necessary. 

The powers designated in numbers 12, 13, and 14 shall not be exer- 
cised by a director so long as there is a delegate of the protector in 
office. 

Art. 59. One of the directors shall represent the bank and he shall 
exercise the powers and have the attributes granted the directors 
(direccion) by article 58 of these statutes, and he shall authorize 
with his signature all the acts, contracts, and operations that may be 
made. 

In the discharge of this duty both directors shall periodically take 
their turn. 

Art. 60. In the case of an}^ judicial proceeding (demanda judicial) 
other than for the collection of bank accounts (creditos del banco) 
the directors must first obtain the approval of the governing board 
before acting therein. 

Art. 61. The directors shall be accountable (responsables) to the 
bank for all operations carried on by them beyond their powers, or 
contrary to the statutes, by-laws, and resolutions in force. 



158 
Title IX. — Dissolution and winding up of the bank. 

Art. 62. The bank shall be dissolved (1) upon the expiration of 
the term of its life, except an extension be had ; (2) upon the loss of 
one-half of the capital subscribed, in which case the governing board 
shall immediately call, within as short a period as possible, an extra- 
ordinary general meeting to report the condition of the bank. 

The general board may direct that the bank shall continue, in 
which case it may determine the necessary steps to be taken to fix the 
status of the bank, provided those present and voting represent two- 
thirds of the capital. 

Art. 63. A dissolution having been decided upon, the winding up 
of the bank's affairs shall be in charge of the governing board then 
in office, except said governing board should determine to appoint 
receivers (liquidadores especiales), in which case said receivers shall 
receive such compensation as the governing board may direct. 

Art. 64. While the winding up of the affairs of the bank continues 
the powers of the general board shall remain intact. 

This board shall specially have the power to approve the accounts 
of the receivership (liquidacion) , and to give a discharge. 

The amount realized after paying the debts and expenses shall be 
distributed pro rata amongst the stockholders. 

Title X. — General provisions. 

Art. 65. The bank shall not furnish any information concerning 
the funds in its possession on a current account, or on deposit, belong- 
ing to a given person, save by virtue of a judicial order. 

Art. 66. Dividends declared and not called for within three years 
following the date upon which they were available shall draw in 
favor of the bank the interest specified for voluntary deposits in 
money, commencing from the expiration of said period. 

Art. 67. Questions arising between the bank and one or more stock- 
holders, or between stockholders and the governing board, shall be 
submitted to the decision of arbitrators (amigables componedores) 
appointed in accordance with the law of civil procedure, in accord- 
ance with the provisions of which said arbitration shall be had. 
Approved by His Majesty, Madrid, July 14, 1897. 

Castellano, 

Colonial Minister. 
A true copy. 

Cabello, 

Sub director. 



NEW STATUTES OF THE BANCO ESPANOL-FILIPINO. 



AN ACT To confirm cerlntn rights and franchises of the Banco Espanol-Filipino and to 

amend its statutes. 

Whereas the Banco Espanol-Filipino is a bank incorporated under 
a charter granted by the Kingdom of Spain conferring certain privi- 
leges and rights upon the bank, and especially that of the exclusive 
right of issuing and circulating notes of the bank to an amount 
equal to three times its capital stock, which was authorized to be 
three million of pesos, equivalent to $1,500,000 American currency; 
and 

Whereas the bank has a paid-in capital of 1,500,000 pesos and 
claims to have in addition an unimpaired surplus of 900,000 pesos; 
and 

Whereas the bank has issued, and has now in circulation, its cir- 
culating notes amounting substantially to 1,500,000 pesos; and 

Whereas the authorities of the bank contend that under the Ameri- 
can sovereignty, by reason of the guaranty of the Treaty of Paris, 
they may exercise the same exclusive privilege with respect to circu- 
lating notes which was given them under the Spanish charter, and, 
therefore, that they may increase their capital stock to 3,000,000 
pesos and issue notes to the amount of 9,000,000 pesos ; and 

Whereas the representatives of the bank contend that the Philip- 
pine government has violated the exclusive right of the bank above 
set forth in issuing so-called silver certificates secured by a deposit 
of similar pesos in the treasury of the islands ; and 

Whereas the Philippine government, while recognizing as valid 
the present circulation, has heretofore denied the right of the Phil- 
ippine bank under its charter to issue notes equal to three times its 
capital stock, on the ground that such note-issuing franchise was an 
exercise of sovereign power which was not transmitted or guaranteed 
by the treaty of Paris, and has, therefore, imposed a prohibitory 
tax of 12 per cent on any notes issued beyond the actual paid-in 
capital stock of the bank, because of its belief that the certain pay- 
ment or redemption of such notes will not be properly secured under 
the provisions of the Spanish charter; and 

Wliereas the bank now threatens to test in court the validity of its 
franchise and the validity of the prohibitory tax, and relies upon the 
action of the Congress of the United States in confirming a similar 
charter granted to the Bank of Porto Rico; and 

Whereas the Philippine government has no objection to the issue 
of circulating notes by this bank to the extent permitted by the Span- 
ish charter, provided only that it shall not be exclusive, and that 
proper provision shall be made for securing the redemption or pay- 
ment of such notes: 

(159) 



160 

Now, therefore, by way of compromise of the questions arising 
between the Banco Espanol-Filipino and the Philippine government 
in respect to its charter, and the rights already conferred thereby, the 
Philippine government, by virtue of the general powers conferred 
upon it under section 74 and other sections of the act of July 1, 1902, 
does hereby amend and confirm the Spanish charter of the Banco 
Espanol-Filipino as the same is hereinafter set forth: Provided, how- 
ever, That nothing in this act shall affect the validity of acts done 
and rights and causes of action which have arisen under the existing 
statutes of said bank in its relations with individuals, firms, corpora- 
tions, and associations in the conduct of the banking business, except 
that validity is hereby given to all acts heretofore performed by the 
bank which would otherwise be legal, and whose validity might be 
questioned by reason of the failure of the bank to comply with its 
statutes in regard to the participation of the government in the manu- 
agement of the bank: And provided further, That the charter and 
statutes of the bank hereinafter set forth by way of amendment and 
confirmation shall not take effect until the same shall be duly and in 
legal form accepted by the proper authorities of the bank represent- 
ing the corporation. 

ARTICLES OF INCORPORATION OF THE BANCO ESPANOL-FILIPINO. 

Title I. — Name, constitution, title, objects, domicile, and duration of 

the corporation. 

Article I. 

That the Banco Espanol-Filipino, founded in 1851 by a joint stock 
company duly authorized to transact business, and reorganized by 
virtue of royal decree of February 7, 1896, shall hereafter be governed 
by these articles of incorporation. 

Article II. 

That the Banco Espanol-Filipino shall be a body corporate, with 
power to adopt a corporate seal, and shall have succession for the 
period herein provided ; that its corporate existence shall be extended 
for twenty-five years from January 1, 1903. This period may be 
extended at the request of the majority of the stockholders of the 
bank, provided such request be made at least one year before the 
expiration of the twenty-five years mentioned. It may make con- 
tracts, sue and be sued, complain and defend, in any court of law or 
equity, as fully as a natural person. 

Article III. 

That the bank is authorized to change its name, by vote of the 
stockholders in general assembly, to " The Bank of the Philippine 
Islands." 

Article IV. 

The head office of the corporation shall be located in the city of 
Manila, but branches of the bank now established may be continued, 
and others may be established or discontinued in other parts of the 
Philippine Islands, subject to the approval of the governor-general 



161 

of the Philippine Islands, and agencies of such bank may be estab- 
lished in the United States and In foreign countries, subject to the 
approval of the governor-general of the Philippine Islands, and in 
accordance with the laws of the United States or such foreign 
countries. 

Article V. 

The bank is authorized to engage in the following classes of trans- 
actions : 

1. Discounting bills of exchange whose maturity does not exceed 
six months and commercial promissory notes whose maturity does not 
exceed one year. 

2. Making collections of drafts and other current negotiable paper 
and advancing money thereon. 

3. Receiving deposits and opening current accounts in currency or 
upon the deposit of public, provincial, municipal, industrial, or rail- 
way securities issued by legally constituted corporations. 

4. Receiving and caring for money deposited in trust, arising from 
legacies, voluntary and other trusts, and judicial decrees, or in any 
other manner. 

5. Receiving in the same manner as under paragraph 4 gold and 
silver bars, jewelry with or without precious stones, and stocks and 
bonds and other securities issued by corporations. 

6. Negotiating or drawing bills of exchange, whether domestic or 
foreign, under the formalities prescribed by the Code of Commerce 
as modified by the provisions of this act. 

7. Dealing in gold and silver. 

8. Making loans upon the security of deposit with the bank, as 
collateral, of precious metals, articles of commerce, products of the 
country, negotiable securities, and industrial and commercial bills 
which are easily and safely realized upon at any time: Provided^ 
That all such loans shall be made under regulations established by 
the general board of directors. Such collateral securities shall be ac- 
cepted only at a rate not exceeding three-fourths of their market or 
appraised value, except that when the person or legal entity to which 
a loan is to be made is, in the judgment of the general board of 
directors, sufficiently solvent, apart from the collateral furnished, 
loans may be made to the amount of ninety per cent of the market 
value of said collateral security, provided that said security is easily 
convertible into cash and the person to whom the advance is made is a 
client of the bank; but said person shall, upon the demand of the 
bank, pay in cash or deposit first-class securities to cover any depre- 
ciation in the market value of the securities furnished. 

/ 9. Making loans on bills of lading, when invoices and insurance 
policies satisfactory to the bank are attached thereto: Provided^ 
That the amount of such loan shall not exceed three-fourths of the 
current market value of the articles covered by such bills of lading. 

10. Granting current credit accounts in favor of clients who have 
been approved by the general board of directors, such accounts pay- 
ing to the bank a commission upon the sums upon which they are 
entitled to draw, in addition to the interest upon amounts actually 
used. 

11. Buying and selling or otherwise negotiating securities, and 
borrowing money upon securities owned by the bank. 



162 

12. Making loans upon real estate, when mortgage certificates run- 
ning for a definite term can be sold for the amounts thus loaned; 
but the amount invested at any one time in such loans, or in any loans 
upon real estate security, shall not exceed twenty per centum of the 
capital of the bank, and if such investments are now in excess of that 
sum they shall be reduced as rapidly as the interests of the bank are 
deemed to justify, under the direction of the treasurer of the Philip- 
pine Islands. 

13. Making loans upon vessels which are insured and free from 
encumbrance, provided such loans do not exceed half the value of 
the ship nor run for more than one year. Such loans shall not exceed 
ten per centum of the paid-up capital of the bank. 

14. Making loans to firms and corporations established in the 
Philippine Archipelago and which, in the opinion of the general 
board of directors, are of undoubted solvency, provided such loans 
shall not exceed ninety days in duration. 

15. Undertaking on commission the purchase and sale of securities 
and such other banking operations, under regulations established by 
the general board of directors, as may be within the incidental powers 
of a bank; but no powers shall be exercised which are not expressly 
granted by this act if such exercise is prohibited by the governor- 
general of the Philippine Islands. 

16. Preparing, issuing, and circulating bank notes under the pro- 
visions of this act. 

Article VI. 

The bank shall not make any loan or discount on the security of the 
shares of its own capital stock, nor be a purchaser or holder of any 
such shares, unless such security or purchase shall be necessary to 
prevent loss upon a debt previously contracted in good faith; and 
stock so purchased or acquired shall be sold or disposed of at public 
or private sale within six months from the time it is acquired. 

Article VII. 

All notes and bills of exchange discounted by the bank must bear 
at least two signatures of known solvency, one of which must be a 
resident of the locality of the transaction and must comply in other 
respects with the provisions of the code of commerce, except that 
such transactions may, with the approval of the president of the 
bank, be for a longer period than ninety days, and one signature may 
be dispensed with when loans are made on negotiable securities, as 
provided by paragraph eight of Article V. 

Warrants or drafts drawn by the treasurer of the Philippine 
Islands or of the United States may be accepted without the signa- 
tures and conditions required in the case of private parties. 

Article VIII. 

The total liabilities to the bank of any person, or of any company, 
corporation, or firm, for money borrowed, including in the liabilities 
of a firm the liabilities of the several members thereof, shall at no 
time exceed one-tenth of the amount of the capital stock of the bank, 
actually paid in and unimpaired, and one-tenth part of its unim- 



163 

paired surplus fund ; but the discount of bills of exchange drawn in 
good faith against actually existing values, and the discount of com- 
mercial or business paper actually owned by the person negotiating 
the same shall not be considered as money borrowed. 

Article IX. 

Before making loans on precious metals, merchandise, and goods 
in warehouse, the value of the same shall be appraised by experts 
appointed by the officers of the bank, but the bank shall not be liable 
for any loss, damage, deterioration, or shortage of or to the mer- 
chandise so stored, except in cases arising from its default or negli- 
gence. 

Article X. 

All real property upon which mortgage loans are made must have 
a marketable title and be free from all encumbrances and liens. 

Buildings, if city property, must be constructed of substantial 
material; and in all cases the buildings or improvements upon such 
real estate shall be insured to at least 75 per centum of their value, 
and no loans shall be made on real estate to an amount greater than 
50 per centum of the value thereof. 

Article XI. 

Merchandise specified in a bill of lading upon which a loan is 
made by the bank must be consigned to such person as the bank shall 
designate at the place of destination, who may deduct the current 
commissions and charges, and shall comply with the orders of the 
shipper as to the sale or disposition of the property, and pay the 
proceeds thereof to the bank to the amount of its loan, charges, and 
expenses. 

In case of loss of merchandise, the bank may proceed, at its option, 
against the shippers or carriers thereof for the amount of the loan, 
with all charges and expenses, or against the insurance company in- 
suring the same for the amount of such insurance. 

Article XII. 

Upon deposits made in the bank of precious metals or merchandise, 
other than money in current account, the bank shall furnish to the 
depositor a certificate containing the following particulars : 

First. The name and domicile of the depositor or of the authority 
ordering the deposit. 
< Second. The nature and value of the deposit, and where it con- 
sists of bars or jewelry of gold or silver, the weight and specific 
qualities thereof. 

Third. The date of the deposit and the entry number in the proper 
books of the bank. 

Article XIII. 

The officers of the bank shall, within the limitations of this act, be 
exclusive judges as to the acceptance or refusal of drafts, notes, and 
bills of exchange submitted for discount, and of all applications for 
loans and of other business transactions. 



164 

Akticle XIV. * 

The rates of interest on discounts and loans, on deposits, collections, 
mortgages, etc., shall be fixed every six months by the general board 
of directors, with the approval of the president of the bank, and such 
rates, if not contrary to law, shall be those charged in cases where no 
specific agreement is made, but the bank may change such rates, from 
time to time, upon notice of one week, and may make other rates by 
agreement of both parties. All expenses connected with the trans- 
action, including the fees of appraisers, shall be charged to the bor- 
rower. 

Article XV. 

The bank ma}^ order the sale of collateral security in its custody, 
consisting of securities or merchandise, or any other thing, three days 
after having called upon the debtor, by written notice, to increase 
the amount of such security, if in the meantime he has failed to 
comply with such request, or after the maturity of a loan if the loan 
has not been paid. These sales shall be made at public auction, with 
the assistance of a notary or exchange agent or broker, and without 
the requirement of any judicial order or process; and in order to 
avoid delay- or difficulty in the disposal of such collateral security, 
and that the bank may accomplish the sale without interference on 
the part of the debtor, it shall set forth in the note or' evidence of 
indebtedness that the collateral security given is to be considered as 
transferred to the bank without any further formality by the fact of 
delivery, under the conditions set forth therein. 

All such securities registered in the name of the owner shall be 
transferred in due form to the bank, which shall issue therefor a 
receipt setting forth the terms of the delivery and the purposes for 
which such transfer has been made. 

If the proceeds of the sale of such securities do not cover the full 
amount of the loan, together with interest and other charges thereon, 
the bank may proceed against the debtor for the difference, but any 
amount exceeding the full indebtedness to the bank shall be paid 
over to the debtor. 

Parties obtaining loans on bills of lading must increase the amount 
of security with the bank whenever a fall of ten per centum takes 
place in the market value of the merchandise, and if upon maturity 
of the loan the amount has not been paid or the vessel has not arrived 
with the merchandise constituting such security, the bank may, at its 
option, proceed against the debtor or await the arrival of the vessel, 
in order to make a sale of such merchandise, with the understanding 
that if the bank shall elect the former remedy, such action shall not 
impair the right of the bank to proceed against the security itself at 
such time and in such manner as it may deem proper. 

Title II. — Concerning capital stock and shares. 

Article XVI. 

The bank may increase the amount of its capital stock from time 
to time to a total amount not exceeding ten million pesos, by a vote of 
a majority in amount of the stock, at a meeting of the general assem- 
bly of the stockholders, by the bona fide sale of new stock for not 



165 

less than par in cash, and such increase of capital shall be valid only 
when the whole amount of such increase shall be paid in and notice 
thereof shall have been transmitted to the treasurer of the Philippine 
Islands and his certificate obtained specifying the amount of such 
increase of capital stock, with his approval thereof, and that it has 
been duly paid in as part of the capital of the bank. 

Article XVII. 

The existing capital and any increase of the same which may be 
made shall be represented by shares of the face value of 200 pesos 
each. 

Article XVIII. 

In case of an increase of the capital stock by authority of a general 
assembly of the stockholders, the shares shall be issued upon the pay- 
ment in full of the price therefor, to be fixed by the bank, not less 
than 200 pesos for each share, plus such percentage as corresponds to 
the ratio of the reserve funds or surplus then on hand and unim- 
paired to the aggregate amount of the capital after such increase of 
capital. 

Article XIX. 

The bank shall maintain* a reserve fund or surplus of not less than 
fifteen per centum of its capital stock issued and outstanding, which 
fund shall be subject to the same obligations as capital, and shall 
be made up of the net profits resulting from the operations of the 
bank after deducting the dividends paid upon capital. 

The bank may create an additional reserve fund for the purpose 
of distributing dividends when the amount actually earned in any 
year does not reach six per centum of the capital stock, but this fund 
shall not be applied to the increase of the capital stock of the bank. 

Article XX. 

The ownership of the shares of the capital of the bank shall be re- 
corded in the name of a person, corporation, or other legal entity in 
the register of the bank, and registered stock certificates shall be 
issued to the record owners thereof. New issues of capital shall be 
registered in the same manner, under regulations to be made by the 
general board of directors. 

Article XXI. 

Shares of the capital stock may be transferred by a declaration 
made in person before a proper officer of the bank by the party trans- 
ferring the same, or by some one having power of attorney to sign 
said register, upon first presenting to the bank the original certificate, 
for which, upon cancellation, a new certificate will be issued. 

Article XXII. 

That the stockholders of the bank shall be subject to no other or 
additional liability than the amount which they shall have paid or 
bound themselves to contribute in payment for the shares standing 
in their names, not exceeding the face value of said shares. 

22380—08 12 



166 

Article XXIII. 

Stock in the bank may be held by persons and corporations with- 
out regard to domicile, and officers and directors may be chosen with- 
out regard to nationality, except that a majority of the board of 
directors shall be made up of citizens of the United States or of the 
Philippine Islands ; but money in current account and securities and 
other articles of value deposited in the bank which is the property of 
foreigners shall not be subject to attachment, confiscation, or seizures 
because of war between their respective nations, except as such proc- 
esses would lie in the ordinary course of law against citizens of the 
United States or of the Philippine Islands. 

Title III. — Concerning the issue of circulating notes. 

Article XXIV. 

That the circulating notes of the bank shall hereafter be issued 
under the following limitations of amount and conditions: 

(a) To a present amount not exceeding two million four hundred 
thousand pesos, which shall represent the paid up and unimpaired 
capital of the bank and the value of the surplus as ascertained by 
the governor-general of the Philippine Islands; and in case such 
capital and surplus shall not, in the opinion of the governor-general 
of the Philippine Islands, be equal in value to the amount of circu- 
lation herein authorized, then said governor-general may require a 
contraction of such circulation until it shall not exceed the value of 
the capital and surplus of the bank or the deposit with the treasurer 
of the Philippine Islands of commercial paper conforming to the 
statutes of the bank and acceptable to the governor-general, for any 
excess in the amount of circulation above the value of the capital and 
surplus as ascertained and determined by him: Provided, however, 
That as a condition precedent of issuing notes to the extent of the 
paid up and unimpaired capital of the bank and the value of the 
surplus as ascertained by the governor-general as above permitted 
said surplus shall be formally treated as a part of the capital of the 
bank and shares of stock issued therefor to the persons entitled 
thereto. And said bank is hereby authorized to issue its circulating 
notes, secured by its capital as herein provided, in equal proportion 
with each increase of paid in capital stock in cash, not exceeding nine 
million pesos; and all notes so issued shall be governed by the pro- 
visions of this section. 

(b) To a present additional amount not exceeding six hundred 
thousand pesos upon deposit with the treasurer of the Philippine 
Islands of bonds of the United States, bonds or certificates of the 
government of the Philippine Islands, bonds of the city of Manila, 
stock or bonds of railways or mortgage banks upon which interest 
or principal has been guaranteed by the government of the Philip- 
pine Islands, or other securities acceptable to the governor-general 
of said Philippine Islands, and the percentage of circulation to be 
allowed upon the face value or market value of each of said class of 
securities shall be determined by said governor-general of the Philip- 
pine Islands. Such notes may be issued at the discretion of the bank, 
subject only to the condition that the securities deposited shall be 



167 

acceptable in character and amount to the governor-general of the 
Philippine Islands, and without regard to whether issues have been 
made or applied for under other provisions of this act. And in case 
of the increase of the paid up and unimpaired capital of the bank 
from two million four hundred thousand pesos to three million pesos 
the treasurer of the Philippine Islands shall deliver to the bank the 
securities deposited with him to cover circulating notes under this 
paragraph (&). 

It being the intention that the total circulating notes issued under 
this act shall never exceed in amount nine million pesos, representing 
an equal amount of the paid up and unimpaired capital of the bank. 

Article XXV. 

All outstanding notes of the bank shall, after January 1, 1908, 
constitute a preferred lien upon the assets of the bank, except as to 
such securities as have been specifically deposited under special agree- 
ments with public officials for the safe-keeping of public moneys; 
and any bonds or other securities deposited with the treasurer of the 
Philippine Islands, as hereinbefore provided, for the security of the 
circulating notes of the bank, shall be held exclusively for that pur- 
pose until such notes shall be redeemed; but the treasurer of the 
Philippine Islands shall give to the bank powers of attorney to re- 
ceive and appropriate to its own use the interest and dividends on 
such securities in the custody of said treasurer ; but such powers shall 
become inoperative whenever the bank shall fail to redeem its circu- 
lating notes, and said treasurer of the Philippine Islands, under 
regulations prescribed bj the governor-general, may permit or require 
an exchange to be made of any of the securities in his custody. 

Article XXVI. 

The bank shall be held to renounce all claim to the exclusive privi- 
lege of issuing notes in the Philippine Islands, or to any other exclu- 
sive privilege not set forth in this act; but no laws or regulations 
shall be made or enforced affecting the bank, or imposing charges or 
taxation upon it, which shall not apply equally to other banks of a 
similar type operating under similar conditions, and no bank shall be 
authorized to issue circulating notes in the Philippine Islands with a 
paid-up capital less than two million pesos ; but this provision shall 
not preclude the government from granting special privileges to 
agricultural banks, savings banks, mortgage banks, or other institu- 
tions of special types whose principal business is not commercial 
banking. 

Article XXVII. 

That the treasurer of the Philippine Islands, and all assistant 
treasurers and provincial and municipal treasurers and other public 
officials, shall be directed to receive the circulating notes of the bank 
for public dues so long as said circulating notes are paid in the lawful 
money of the Philippine Islands or of the United States, without dis- 
count and on demand, at the bank and its branches. 



168 
Article XXVIII. 

That the notes issued under the. provisions of paragraph (a) of 
Article XXIV of this act shall pay a tax at the rate of one-half of 
one per centum per annum; and the notes temporarily issued under 
the provisions of paragraph (6) of said Article XXIV of this act 
shall pay a tax at the rate of one per centum per annum, such taxes to 
be assessed upon the amount of notes actually in circulation and not 
held in the bank or its branches, at fixed intervals not less frequently 
than once a month, to be determined by regulations made by the 
treasurer of the Philippine Islands. 

Article XXIX. 

That whenever the bank desires to withdraw circulating notes 
which are not in its possession it may deposit with the treasurer of 
the Philippine Islands in the lawful money of the Philippine Islands 
or of the United States an amount equal to the face value of the cir- 
culating notes which are to be withdrawn and retired, and if such 
notes are represented by securities in the custody of said treasurer 
he may surrender such portion of said securities as, in his opinion, 
will represent a just proportion of the securities held to secure circu- 
lating notes, and thereupon' the taxes imposed by this act upon circu- 
lating notes shall cease upon an amount thereof equal to the amount 
of lawful money deposited, and such lawful money shall be repaid 
from time to time to the bank upon the presentation and surrender to 
said treasurer of the Philippine Islands of notes which have been 
received* or redeemed. 

Article XXX. 

That the circulating notes of the bank may be issued in denomina- 
tions of 5 pesos, 10 pesos, 20 pesos, 50 pesos, 100 pesos, and 200 pesos, 
and shall express upon their face the promise of the bank to redeem 
them on demand in lawful money of the Philippine Islands or of the 
United States, attested by the signatures of the president or vice- 
president and cashier. 

Article XXXI. 

That the bank shall at all times have on hand, in lawful money of 
the Philippine Islands or of the United States, an amount equal in 
value to at least 25 per centum of the aggregate amount of its notes 
in circulation and in adition thereto 20 per centum of its deposits in 
current accounts which are payable on demand; provided, however, 
that this requirement shall not apply to the notes issued under para- 
graph (b), Article XXIV above. 

Article XXXII. 

That the circulating notes of the bank shall hereafter be issued to 
the bank by the treasurer of the Philippine Islands, who shall make 
requisitions upon the Bureau of Insular Affairs, at Washington, for 
such a supply as may be necessary to anticipate reasonable demands, 



169 

and he shall keep such notes in his custody in the treasury of the 
Philippine Islands ; but said notes shall not have validity as currency 
until the seal of the bank and the signatures of its officers duly au- 
thorized to perform such functions are attached. 

Title IV. — Concerning the powers of the general assembly of the 

stockholders. 

Article XXXIII. 

The stockholders of the bank shall be represented at its general 
assembly by those among them who are owners of, or who represent, 
at least ten shares of the capital stock registered in their names at 
least two months before the meeting as shown by the registered list of 
stockholders. 

Stockholders may be represented at general meetings by proxies 
designated by them, but the appointment of such proxies shall be 
valid only when proper power of attorney is executed before a 
notary public. 

Stockholders not possessing full legal capacity, as married women, 
minors, et cetera, or possessing the character of corporations, associa- 
tions, or other legal entities, shall be represented at the general meet- 
ings and in all other matters relating to the bank by their legal rep- 
resentatives. 

Article XXXIV. 

One vote in the general assembly of the stockholders shall be al- 
lowed each ten shares of the capital of the bank actually represented 
by the owner thereof or by duly authorized proxy. 

Article XXXY. 

The general assembly of the stockholders of the bank shall be held 
on the second Tuesday of February in each year, and may be ad- 
journed from day to day until its business is concluded. 

Article XXXVI. 

The general assembly of the stockholders shall have the following 
powers : 

1. To elect the members of the general board of directors. 

2. To inform themselves of the condition of the bank through a 
report presented annually, or oftener, by the general board of di- 
rectors, and through the annual general balance sheet. 

3. To act on recommendations made by the general board of di- 
rectors relating to the interests of the bank, in conformity with the 
statutes and by-laws. 

4. Any member of the general assembly of the stockholders may 
present to said general assembly in writing such suggestions as he may 
deem proper for the welfare of the bank, but such recommendations 
shall not be acted upon until the next following meeting, nor until 
the general board of directors has passed upon them. 



170 

5. To authorize the increase of the capital stock and prescribe the 
manner and conditions under which it shall be made, subject to the 
provisions of this act. 

6. To exercise any other powers expressly granted by or reasonably 
to be implied from these statutes and the by-laws of the bank, and 
not in conflict with this act. 

Article XXXVII. 

A general assembly of the stockholders of the bank may be con- 
vened in extraordinaiy session whenever the number of members of 
the general board of directors has been so reduced as to make it im- 
possible for the members thereof to perform their duties, or whenever 
five members of the general board of directors shall so request, and 
the object of such meeting shall be stated in the Gall. 

Article XXXVIII. 

In choosing the directors of the bank, at the general assembly of 
the stockholders, an absolute majority of votes cast shall be required 
to make a choice, and the vote shall be taken by secret ballot. 

Title V. — Powers of the hoard of directors. 

Article XXXIX. 

The direction of the bank shall be under the control of a general 
board of directors, who shall choose a president, vice-presidents, a 
cashier, and such other officers as they may deem expedient, and said 
general board of directors may fix the salaries of such officials at 
such amounts as they may deem proper. 

Article XL. 

The general board of directors of the bank shall consist of the presi- 
dent and vice-presidents, not exceeding five in number, who shall be 
members of the board ex officio, and not less than eleven nor more 
than twenty-five directors chosen annually by the stockholders in gen- 
eral assembly. Members of the board shall be eligible for reelection. 

Article XLI. 

There may be elected by the general assembly of the stockholders, 
at its discretion, associate directors of branches in the Philippine 
Islands, in the United States, or in foreign countries, who shall, 
under regulations made by the general board of directors, meet sepa- 
rately from said general board to consider matters relating to the 
interests of the branch for which they are elected, but their action 
shall be advisory only and shall be subject to the approval of the 
general board of directors at Manila. Such associate directors may 
or may not, in the discretion of the general assembly, be required to 
be stockholders in the bank, and shall be subject to removal or termi- 
nation of their functions at any time upon vote of said general 
assembly. 



171 

Article XLII. 

Each member of the general board of directors, in order to be 
eligible as a member, shall deposit with the bank, in trust, before 
assuming his duties not less than ten shares of the stock of the bank 
registered in his name. Each such director when appointed or 
elected shall take an oath that he will, so far as the duty devolves 
upon him, diligently and honestly administer the affairs of the bank, 
and that he will not knowingly violate, or willingly permit to be 
violated, any of the provisions of this act, which oath, subscribed by 
himself and certified by the officer before whom it is taken, shall be 
immediately transmitted to the treasurer of the Philippine Islands 
and by him filed and preserved in his office. , 

Article XLIII. 

Members of the board of directors, except the president and vice- 
presidents of the bank, shall be entitled to a fee for attendance at 
meetings of said board, which shall be fixed by the general board, but 
shall not exceed 25 pesos. 

Article XLIV. 

The duties of the general board of directors shall be as follows : 

1. To supervise the issue and transfer of certificates of stock and 
establish regulations therefor. 

2. To determine from time to time the number and amount of cir- 
culating notes to be issued under the provisions of this act. 

3. To fix the rate of discounts and loans. 

4. To prepare confidential lists of the firms and corporations to 
which it considers discounts may properly be accorded, fixing the 
amount of credit to be extended to each. 

5. To appoint agents and correspondents and to designate the 
points where they are to be stationed. 

6. To authorize the establishment of branch banks at such points 
as will serve the public interest and that of the bank, in accordance 
with Article IV of these statutes. 

7. To ratify, if satisfactory to it, transactions between the bank 
and the government and other current transactions. 

8. To take care that in all the offices of the bank the statutes, 
by-laws, orders, and resolutions in force are strictly observed. 

9. To examine and consider, at each regular meeting, the transac- 
tions of the officers of the bank and the operations of the bank. 

' 10. To elect the president, vice-presidents, secretary, and cashiers 
of the bank. 

11. To appoint, on recommendation of the officers of the bank, 
bookkeepers and minor employees of the bank and of its branches. 

12. To remove or suspend employees of the bank, with or without 
the recommendations of the officers. 

13. To draw up the annual report concerning the operations of the 
bank, which shall be read at the general assembly of the stockholders. 

14. To examine and audit the accounts submitted by the officers 
and to approve the general balance sheet. 



172 

15. To declare semiannually, in accordance with such balance sheet 
and the state of the voluntary reserve fund, the dividend to be paid 
to the stockholders. 

16. To examine into and take under advisement recommendations 
made by stockholders in general assembly for the welfare of the bank, 
and to present the same, with their report thereon, to the next gen- 
eral assembly. 

17. To make, of its own motion, to said general assembly all sug- 
gestions which it deems proper for the advantage of the bank. 

Article XLV. 

No action shall be taken at the sessions of the general board of 
directors except when a majority is present. 

Article XLVI. 

Resolutions of the general board of directors must be passed by the 
votes of a majority of the members present. 

Article XL VII. 

The secretary of the bank shall be present at all the sessions of the 
general board of directors, without voice or vote, and shall draw up 
the minutes, which shall be signed by the president and the secretary 
himself. 

Title VI. — Concerning the officers of the bank. 

Article XLVIII. 

The administration of all the affairs of the bank and the control of 
its operations shall be in charge of the president, assisted by two or 
more vice-presidents and a secretary, who shall perform such duties 
as the president may direct. 

Article XLIX. 

The officers of the bank shall receive, in addition to their salaries, 
the compensation hereinafter set forth, which shall be divided as pre- 
scribed by the general board of directors. 

Article L. 

The powers of the president of the bank shall be : 

1. To direct all the operations of the bank and to give orders and 
instructions to all the employees thereof who are to take part in said 
operations. 

2. To execute all contracts entered into on behalf of the bank, and 
to perform all other duties customarily incident to his office. 

3. To authenticate by his signature all administrative acts and obli- 
gations and documents issued by the bank. 

4. To consider and pass upon applications for discounts and loans. 

5. To institute and prosecute, in the name of the bank, all judicial 
proceedings that may be necessary for the collection of debts due to 
the bank and for the preservation of its rights. 



173 

6. To make recommendations to the general board of directors in 
regard to transactions not provided for by these statutes. 

7. To recommend to the general board of directors the appointment 
of all subordinate employees and servants of the bank. 

8. To supervise and direct the conduct of the employees of the bank 
in the performance of their duties and to temporarily suspend for 
just cause those who are delinquent therein, except those officials 
elected by the general board of directors, who can only be suspended 
by said board. 

9. To call the regular general assemblies of the stockholders and 
such extraordinary general assemblies as may be requested by a suffi- 
cient number of the general board of directors. 

10. To convene the general board of directors in extraordinary ses- 
sion whenever he deems it necessary, either upon his own motion or 
at the request of any three members of said board. 

11. To preside at general assemblies of the stockholders and meet- 
ings of the general board of directors, with a vote. 

12. To make visits of inspection to the offices of the bank and to 
address to the general board of directors such recommendations as he 
may deem proper concerning its condition. 

13. To verify the monthly balance sheet and to sign his approval 
of the same in the records of the bank. 

14. To sign stock certificates and to certify by his signature notes 
issued payable to bearer. 

15. To examine the report to be made to the general assembly rela- 
tive to the condition of the bank and to approve the same before it 
is read to the meeting, satisfying himself in advance of the correct- 
ness of its contents. 

Article LI. 

That in the absence or disability of the president, the vice-presi- 
dents, in the order designated by the general board of directors, shall 
exercise the powers herein granted to the president. 

Article LII. 

In the case of any judicial proceedings other than for the collection 
of obligations to the bank, the officers must obtain the approval of 
the general board of directors before acting therein. 

Article LIII. 

The officers shall be personally accountable to the bank for all oper- 
ations carried on by them beyond their powers or contrary to the 
statutes, by-laws, and regulations of the bank. 

Title VII. — General provisions. 

Article LIV. 

It shall be lawful for the bank to purchase, hold, and convey real 
estate as follows : 

1. Such as shall be necessary for its immediate accommodation in 
the transaction of its business. 



174 

2. Such as shall be mortgaged to it in good faith by way of security 
for debts previously contracted. 

3. Such as shall be conveyed to it in satisfaction of debts previously 
contracted in the course of its dealings, under the limitations herein- 
before imposed. 

4. Such as it shall purchase at sales under judgments, decrees, or 
mortgages held by the bank, or shall purchase to secure debts due to it. 

The bank shall not purchase or hold real estate in any other case 
or for any other purpose than as specified in this article, nor shall it 
hold for a longer period than five years the possession of any real 
estate under mortgage or the title and possession of any real estate 
purchased to secure any debts due to it. 

Article LV. 

The profits or net earnings resulting from the operations of the 
bank, after deducting the expenses of administration and such por- 
tion as corresponds to the legal reserve fund, shall be applied as 
follows: Ten per centum to the executive officers of the bank, to be 
divided according to regulations prescribed by the General Board 
of Directors; five per centum to the members of the General Board 
of Directors, to be distributed in the manner provided in the by- 
laws. The remaining eighty-five per centum shall belong to the 
stockholders, but may be added to the regular or special resrve funds 
or distributed as dividends at a fixed pro rata amount according to 
the number of shares. 

Article LVI. 

The distribution of dividends shall be made at least once in each 
six months when in the judgment of the General Board of Directors 
earnings justify the declaration of a dividend. Should the profits 
not exceed six per centum per annum on the par value of each share, 
the entire amount shall be distributed; should there be an excess 
over said six per centum it shall be divided, two-thirds to the stock- 
holders and one-third to the legal-reserve fund mentioned in Article 
XIX until said reserve fund shall amount to not less than twenty- 
five per centum of the capital stock, after which any surplus shall 
be divided amongst the stockholders in whole or in part, or may 
be used for the creation of the voluntary reserve fund also men- 
tioned in said article as the General Board of Directors may deem 
best. 

Article LVII. 

Dividends declared and not called for within three years following 
the date upon which they are due and payable shall draw the interest 
specified for voluntary deposits in money, commencing from the ex- 
piration of said period. 

Article LVIII. 

No information shall be furnished by the bank concerning the 
funds in its custody in a current account, or on deposit, belonging 
to a given person, corporation, or other legal entity, except under au- 
thority of an order of the governor-general or of a court with 
jurisdiction. 



175 

Article LIX. 

That the treasurer of the Philippine Islands, provincial and munici- 
pal treasurers, and other authorized public officials shall, from time 
to time, deposit with the bank and its branches, upon such terms as 
may be prescribed by the government of the Philippine Islands, such 
public moneys and trust funds as may be available for this purpose, 
without discrimination against the bank or in favor of other institu- 
tions ; but this clause shall not bind such officials to make or maintain 
such deposits when, in their opinion, it is inadvisable. 

Article LX. 

The balance sheet provided for in article 157 of the Code of Com- 
merce shall be drawn up and published monthly, and the bank and 
its branches shall make to the treasurer of the Philippine Islands 
not less than five reports during each and every year, according to 
the form which may be prescribed by him, verified by the oath or 
affirmation of the president or cashier of the bank and attested by 
the signature of at least three of the directors; which report shall 
exhibit, in detail and under appropriate heads, the resources and 
liabilities of the bank at the close of business on any past day 
specified by said treasurer, and shall transmit such report to him 
within five days after the receipt of a request or requisition therefor 
from him ; and the report above required, in the same form in which 
it is made to the treasurer, shall be published, at the expense of the 
bank, in a newspaper in the city of Manila; and the treasurer of 
the Philippine Islands shall have power to call for special reports 
of the condition of the bank and its branches whenever, in his judg- 
ment, the same shall be necessary in order to a full and complete 
knowledge of its condition. Failure to make and transmit such a 
report shall render the bank liable to a penalty of 100 pesos for each 
day after five days that said bank or any of its branches shall delay 
to make and transmit any report as aforesaid; these reports shall be 
in lieu of the quarterly reports prescribed by section one of Act No. 
52 of the Philippine' Commission of November 23, 1900, which 
quarterly reports shall no longer be required from the bank. 

Article LXI. 

That the government of the Philippine Islands renounces all 
rights which it may have derived under Spanish law to appoint the 
governor and other officers of the bank or to interfere in any way 
with its administration, except to make examination of its solvency 
and supervise its conduct in the interest of the public in the same 
manner as such examination and supervision are or may be exercised 
over national banks in the United States and as prescribed by the laws 
of the Philippine Islands. 

Article LXII. 

That the government of the Philippine Islands renounces all right 
and title derived from Spanish law and existing statutes of the bank 
to a loan of any money to the treasury of the Philippine Islands. 



176 

Title VIII. — Dissolution and winding up of the bank. 

Article LXIII. 

The bank shall be dissolved. (1) upon the expiration of its legal 
term unless legally extended in accordance with the provisions of 
this act, (2) upon the loss of one-half of the capital subscribed, in 
which case the general board of directors shall immediately call, 
within as short a period as possible, an extraordinary general assem- 
bly of the stockholders to report the condition of the bank. 

The general board of directors may direct that the bank shall 
continue, in which case it may determine the necessary steps to be 
taken to fix the status of the bank, provided those present and voting 
represent two-thirds of the capital. 

Article LXIV. 

A dissolution having been decided upon, the winding up of the 
bank's affairs shall be in charge of the general board of directors 
then in office, unless said general board shall determine to appoint 
receivers, in which case said receivers shall receive such compensation 
as said general board may direct. 

Article LXV. 

"While the winding up of the affairs of the bank continues the 
powers of the general board shall remain intact. 

The board shall specially have the power to approve the accounts 
of the receivership and to give a discharge. 

The amount realized, after paying the debts and expenses of the 
bank, shall be distributed pro rata among the stockholders. 

Article LXVI. 

That nothing in this act shall be held to prevent the exercise by 
the governor-general and the treasurer of the Philippine Islands of 
the powers conferred upon them by Act Xumber 556 of the Acts of 
the Philippine Commission, enacted December 9. 1902. or such amend- 
ments of that act as may hereafter be enacted. 

Article LXVII. 

(Customary enacting clause, to take effect at once.) 

I approve. 

TTai. H. Taft. 

Secretary of War. 
July 1. 1907. 

Approved : 

Jeremlvh J. Harty, 
Archbishop of Manila. 
(Through his agent. Festts J. TTade.) 
St. Louis, Mo., July 10, 1907. 



r '08 



[Public Resolution — No. 32.] 

JOINT RESOLUTION To authorize and empower the Banco Espanol de 
Puerto Rico (Spanish Bank of Porto Rico) to amend its by-laws. 

* 

Resolved by the Senate and House of Representatives of the United 
States of America in Congress assembled. That the Banco Espanol de 
Puerto Rico (Spanish Bank of Porto Rico) be, and the said institu- 
tion is hereby, authorized and empowered to amend article one of its 
by-laws, which said by-laws are referred to in, and published with, 
the royal (Spanish) decree dated May fifth, anno Domini eighteen 
hundred and eighty-eight, granting a concession to said bank, so as to 
change its name to that of Bank of Porto Rico (Banco de Puerto 
Rico) and to substitute for its capital in pesos the equivalent in 
money of the United States at the ratio established by law, and to 
amend article thirty-one of said by-laws, so that to be a councilor of 
said bank it may not be necessary to be a Spaniard, and further to 
modify and amend said by-laws, but always in accordance with exist- 
ing law, and subject to the approval of the governor of Porto Rico : 
Provided, That nothing herein contained shall be held to enlarge or 
to permit the enlargement, in any manner or to any extent, of any of 
the rights, powers, or privileges granted to said Banco Espanol de 
Puerto Rico (Spanish Bank of Porto Rico) by the Government of 
Spain: And provided further, That nothing herein contained shall 
be held in any wise to limit or curtail any power which the Govern- 
ment or the Congress of the United States possesses in respect of said 
bank, its powers, privileges, or franchises. 

Approved, June 6, 1900. 

(177) 
O 



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